FibWave Algo Analysis

FibWave Algo Analysis is a pack of services aimed to help fund managers and investment advisors generate investment ideas that can create consistent and positive alpha.

Unconventionality – the key to beating markets

The key to phenomenal big success is unconventionality. In fact, most of the biggest successes are results of unconventional approaches. Success in investing also needs an unconventional approach to beat the markets. If you do what everyone else does, you get what everyone else gets. We use an algorithm, based on time-wave analysis, to predict future direction of asset prices. This analysis, coupled with fundamental analysis, has helped us in consistently generate positive alpha. The earliest successful user of time-wave analysis was W.D. Gann (1878 – 1955). Currently, it is not being used in the mainstream wealth management industry. The less people use a particular approach, the more effective will be its results. If everyone follows the same approach, no one can beat the market.

FibWave algorithm is based on the following assumptions –

• Prices move in wave-like patterns
• There are at-least two waves at any time – major and minor
• Wave patterns are non-random, and can be decoded to project their future directions

Red line is major wave and blue is minor. Best long term buy is at point ‘a’ or ‘c’, and best long term short entry is at ‘i’; or ‘l’. During an up-trend (X to Y), best strategy is to buy on dips (bottoms of minor waves), from Y onwards, sell on rise (on tops of minor waves). In most of the cases, a major wave may last from few months to 1-2 years. Minor wave may last from few weeks to few months.

Key features of Time wave analysis –

1. Future Direction: It can identify probable direction of prices in future
2. Trend Reversal Points: It predicts tops and bottoms reasonably well in time.
3. Risk reward ratio: For example, being identified at wave bottom in multiple time frames implies high risk-reward ratio, or time to invest.
4. Trend Duration: It estimates the probable duration the wave may travel in its current direction. Longer the up-side duration, better is the investment.
5. Multi-asset Analysis: It covers 50+ international indices, sectors, yields, currencies, commodities, crypto, and 20-40 stocks from NYSE, NASDQ. It will also include additional 20 stocks of your choice to be part of analysis.
6. Customization: Possible.
7. More stocks: Possible.
8. What it does not do: It cannot predict future price targets.
9. There may be periods where future trends are not clear.

Why use FibWave Algo Analysis

1. Market Reversal Points

Biggest money in investment is made at extremes of greed and fear.

But how do we know that this is the end of extreme fear, markets will not fall any more from here? There are no effective conventional tools to estimate the end points of these extremes. But FibWave algorithm, has been successfully doing it since 2018. A look at FibWave’s major predictions below will confirm it –

Major Achievements:

1. Predicted a bull market on 29 Apr, 2023 – The Bull Case. Most global experts were worried about recession at this point.
2. Predicted in September 2021 that a massive financial risk in the form of an Inflation Super Cycle is looming.
3. Predicted a big rally in September 2020
4. Spotted strong signal of serious global risk on February 14th 2020, well before corona became a global threat. Subsequently, global markets fell by 35%. Since the cause was not clear so the article mentions all possible risks.
5. Predicted win of BJP (India) and the start and end of the equity rally of 2019. Markets gained 10% after the prediction.
6. Our “India Invest” portfolio plan started in May 2018, gave an absolute return of 204% compared to 71% of Nifty as on May 2022 (plan closed now).

All predictions were posted on www.trikaalcapital.com for public access. Though our posts explain these predictions using macro analysis, but the ideas are based on the signals generated from algorithm. Since, FibWave algo only shows the end-result, not the cause, so you will find that we explain all the most probable causes in our posts. 

2. Global Asset Class Monitoring

FibWave algo helps investors to be among the firsts on the right side of rotation.

Major events trigger asset-class specific big moves. This right timing can give you big momentum trades – the biggest secret of Wall Street professionals. Without algorithms in investment management, fund managers and investment advisors aren’t properly equipped to fight on today’s investment field. Single asset class approaches are obsolete, yet most investors are not equipped to exploit cross-asset dependencies

FibWave algo enhances the investment management process by monitoring all global asset classes:

• Track and predict crude oil, gold, silver, copper, currencies, and crypto.
• Pre-clean noisy data intelligently to isolate a true signal
• Send emerging alerts about leading market dependencies

An example on gaining from market dependencies signals:

In 2020, 10-year yield of most of the large economies was indicated at a long-term bottom. That implies a rising rates scenario (inflation), then in 2021, gold was indicated at a major bottom – combining inflationary scenario with a gold bottom offered a good investment opportunity. We had mentioned it to our clients, and it proved a good investment.

Do you see how you can systematically benefit from using FibWave algo as your Macro Advisor?

3. Better Timing

Markets lead, fundamentals lag. FibWave algo predicts stock moves before fundamentals.

It improves performance by adding the algo-powered predictive layer to your investment management strategy.

Investing is changing and fundamentals are reaching their limits:

1. Machines have automated existing investment processes; no competitive edge is left now.
2. Fundamental investment management, ossified for decades, has become crowded and is losing its edge.

4. Idea Generation

FibWave algo’s scanner revels hidden opportunities in securities and sectors.

Many times available fundamental information is unable to identify opportunity in a security or a sector. But a complete FibWave multi-asset scan can revel such hidden opportunities – because it only needs price data. FibWave scanner was able to recently identify such clear opportunities in AI, copper, and hydrogen energy sectors. All have done exceedingly well.

It generates sectoral themes by two ways – first by scanning the sector indices and ETFs, and second by full scan of individual securities. At times, multiple securities in same sector may show same signal. It is very useful in niche and subsectors which are not always covered by main sector ETFs or sector indices. For example, the algo had indicated similar bottom signals for several stocks in rooftop solar and hydrogen energy niche sectors during June 2023. On closer inspection, both were found to be excellent long-term opportunities.

How to avail this service?

Contact us.

Details of Trend Forecasting Performance

NIFTY

S&P 500

GOLD

Disclaimer