We have a new upgrade that fixed the API issue that was giving us all sorts of dramas when retrieving share information. Now it is out and ready to go. Thanks for the feedback and the patience.
We have a new upgrade that fixed the API issue that was giving us all sorts of dramas when retrieving share information. Now it is out and ready to go. Thanks for the feedback and the patience.
You have to be amazed at the size and passion of the Bollywood film industry. It churns an incredible amount of work every year, and you have to admit that their movie stars are just stunning – I am talking about the female ones but take your pick. we don’t discriminate here at Viracocha -. Up to now, we have done some market crash analyses for the US markets, so I felt it was time for the Indian market. There had been a few hiccups there too, our frist stop is the Sensex crash of May 2006. Which brings us to the subject of the main picture/banner of this post. The movie Dhoom 2 was the highest grossing picture of all time in India in 2006, a mega blockbuster filmed internationally across India, South Africa and Brazil; not unlike the inter-connection of the financial markets come to think about it. So with the high fueled action of Dhoom as our context, let us take to the Sensex crash.
This is form The Hindu online newspaper to give a little of history:
MUMBAI: In an unprecedented fall, the Bombay Stock Exchange 30 share Sensitive index (Sensex) shed 826.38 points on Thursday, the highest ever fall in the history of Indian stock markets. While some argued it as a reaction to an instruction directed at foreign institutional investors (FIIs) by the Central Board of Direct Taxes (CBDT), others are having a view that the fall is in tune with other global markets.
“It is only a reaction to the sentiment on the international markets. Basically, the metals have fallen and it is in tune with that,” said A. Rama Mohan Rao, Managing Director, UTI Securities Ltd. However, “I believe it is an opportunity for investors with a long-term objective.” According to him, the CBDT circular, which was widely discussed, is not having much impact. “The CBDT circular is not the core reason for this reaction. Percentage-wise, we have to be ready for such a correction.” The maximum fall in a day till date is at around 12 per cent. Today it is only 7 per cent. “We should not panic over absolute numbers. One needs to look at the percentage of fall,” Mr. Rao added.
Explaining to newspersons as to why the market may have crashed and the steps devised to tackle the crisis, Mr. Jha said: “It appears that some brokers trading on the proprietary account may have come under margin pressure and, therefore, may have sold. The RBI has made it clear that banks have been advised to provide ample liquidity to those who may require money to meet margin requirements. Banks are doing so. That position stands and will continue to do so.”
Charting the free fall in the market over the last seven days, Mr. Jha said the Sensex closed at 12217 on May 17. The extreme volatility in the bourses since then, he said, was due to a number of factors. These were the fall in global markets, the meltdown in metal prices, hardening interest rates and the relative attractiveness of other emerging stock markets. “While there were some speculative reports about a draft circular put out by the Central Board of Direct Taxes, the matter has been clarified to the satisfaction of all concerned. It is reiterated that the draft circular made no reference to FIIs. FIIs are governed by separate provisions of the Income-tax Act and the relevant double taxation avoidance agreements… the Indian growth story remains a vibrant growth story,” Mr. Jha said.
So, no shortage of opinions as you can see. There are more opinions to show, but you get the picture. Now let’s put the data to the test.
This analysis one was a bit of a pickle since the Sensex index had been up, until that day in May, in a steady climbing trend. So for this analysis we had to, for the first time in our Crash Courses, refer also to the MACD indicator so that we have some more clarity on what is going on. The underlying technical cause for this is that since it is a quasi-steady climb, then the value of Viracocha indicator wouldn’t flag any significant variation from the overall change rate, but MACD is handy in these instances since it is showing the difference between two moving averages -as y’all probably know-. This very fact is also making a less dramatic relationship between Value and Volume, so a calmed assimilation of the info is needed, since the relationship between the Viracocha lines is a bit different this time.
Here we have identified what we think are our important ‘events’ of that time series. Since MACD was showing a whole lotta nothin’ until pretty much D-day we are going to focus on that later. Let’s do first the Viracocha.
Event 0 – February 13, 2006 – Between Event 0 and Event 1 I am placing a sell zone ending in Event 1. This is where the relationship becomes a bit different than our previous experience looking at markets in the US, so instead of a dramatic red ‘peak’ indicating to get out we have the volume line increasing from 1.9 then to 2.0 and finally to 2.1 thereabouts. This can be translated to trades still being traded and continued to be traded as the price rose, so people were still kinda happy to trade.
Event 1 – April 12, 2006 – This is a very interesting plateau that starts after Event 1 and until May 22. After April 12 it seems like the market is reacting to their buy craze and it is now realising that maybe we are overvalued. Hangover if you will.
May 22, 2006 – This day is where the media gets in and puts focus on the thing (as in the attached media clips), but a midst all the ‘but’s and ‘why’s and ‘wait’s, the data is still showing a typical race to the bottom in Viracocha terms. Both the Value and Volume of the index are following each other to the floor, then it is Volume who picks up first.
Event 2 – June 13, 2006 – Event 2 and Event 3 are displaying something we have seen in other market ‘crashes’ there is a bouncy ball effect just after the said crash, this could potentially bring some losses back to the black. I have always wondered if around those times the fall is too close and too hard for some to react, but the data is cold and has no emotional memory as such. So Event 2 is to get in.
Event 3 – July 12, 2006 – This is a clear signal to sell, and then the market returned to its quasi-steady trend upwards.
The MACD in this case gave us nothing clear until May 15, where then the very dramatic turn is displayed. This May 15 ‘cross of the lines’ is somewhere between Event 1 and May 22, so it is in our view a confirmation to get out, like pronto. In hindsight we could say that this ‘crisis’ was a bit of the slow boiling of the frog, where the common story states that since temperature is raising slowly the poor fellow gets cooked. In saying that we still believe that the signs were there, only masked in the subtle perfumed moonlight environment of one of those wonderful dance numbers on Bollywood.
Back in 2000, after the Y2K scam had been cosumated and we all knew that computers were not going to start destroying everything something happened in the technology world – known as the Dot Com burst. I don’t think it is related to Y2K but the bubble burst was in reality what everybody thought the latter was going to be in possibility. Funny how things work sometimes.
Say my name by Destiny’s Child was in number one on the charts that year, then followed by a whooping 10 weeks of Sanatana’s Maria Maria.
Here is some Wiki context since ’nuff has been said about this.
The dot-com bubble (also referred to as the dot-com boom, the Internet bubble and the information technology bubble) was a historic speculative bubble covering roughly 1997–2000 (with a climax on March 10, 2000, with the NASDAQ peaking at 5,408.60 in intraday trading before closing at 5,048.62) during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the Internet sector and related fields. While the latter part was a boom and bust cycle, the Internet boom is sometimes meant to refer to the steady commercial growth of the Internet with the advent of the World Wide Web, as exemplified by the first release of the Mosaic web browser in 1993, and continuing through the 1990s.
According to dot-com theory, an Internet company’s survival depended on expanding its customer base as rapidly as possible, even if it produced large annual losses. For instance, Google and Amazon.com did not see any profit in their first years. Amazon was spending to alert people to its existence and expand its customer base, and Google was busy spending to create more powerful machine capacity to serve its expanding search engine. The phrase “Get large or get lost” was the wisdom of the day. At the height of the boom, it was possible for a promising dot-com to make an initial public offering (IPO) of its stock and raise a substantial amount of money even though it had never made a profit—or, in some cases, earned any revenue whatsoever. In such a situation, a company’s lifespan was measured by its burn rate: that is, the rate at which a non-profitable company lacking a viable business model ran through its capital.
Public awareness campaigns were one of the ways in which dot-coms sought to expand their customer bases. These included television ads, print ads, and targeting of professional sporting events. Many dot-coms named themselves with onomatopoeic nonsense words that they hoped would be memorable and not easily confused with a competitor. Super Bowl XXXIV in January 2000 featured 16 dot-com companies that each paid over $2 million for a 30-second spot. By contrast, in January 2001, just three dot-coms bought advertising spots during Super Bowl XXXV. In a similar vein, CBS-backed iWon.com gave away $10 million to a lucky contestant on an April 15, 2000 half-hour primetime special that was broadcast on CBS
A combination of rapidly increasing stock prices, market confidence that the companies would turn future profits, individual speculation in stocks, and widely available venture capital created an environment in which many investors were willing to overlook traditional metrics, such as P/E ratio, in favor of basing confidence on technological advancements.
On March 20, 2000, after the NASDAQ had lost more than 10% from its peak. In its cover story “Burning Up” the financial weekly Barron’s quoted Napster-cofounder Sean Parker: “During the next 12 months, scores of highflying Internet upstarts will have used up all their cash. If they can’t scare up any more, they may be in for a savage shakeout. An exclusive survey of the likely losers”. The article pointed out that “America’s 371 publicly traded Internet companies have grown to the point that they are collectively valued at $1.3 trillion, which amounts to about 8% of the entire U.S. stock market”.
Now for the good part, let look at he events though our Viracocha set of graphs.
Event 0 – 20 Oct 1999. The heating of the market has been happening for a while now. We have noticed that Viracocha may be best used at detecting these kind of unusual movements. This is a good time to get in the market, all the signs were there and people were very confident and buying shares. Also notice that a bit after Event 0 the “beams were crossed” indicating that a turn was coming.
Event 1 – 23 Dec 1999. While everybody was drinking champagne at the family table and eating Christmas dinner the DotCom beast started to move in strange ways. After people continuously left the market – evident in the low yellow line- then the drop in the price was coming. Event 1 is a get out signal.
Event 2 – 28 Jan 2000. With the benefit of hindsight we can say that Event 2 was the last moment to get in. There was a big dip in price at the start of the year. Although in reality it was more of a hiccup and maybe too quick to notice in the new year euphoria of 2000.
Event 3 – 29 Feb 2000. This is the clear sign to get out or else… This is what we really want to see to reduce risk, the red peak right before the dip in price that occurred after March 10. So in a way we were 10 days in advance. And yes, February had 29 days that year.
We have other financial market crash analyses here
We have experienced some really crazy data behaviour over the past three weeks or so. Some of the shares, specially the Australian ones, were showing data that was just off. We were monitoring this closely and did testing on our end, but it was the raw data coming from our source. And then, after much ado, it just went away like that… weird stuff.
The data behaviour included graphs not showing, some of the graphs had the exact same data for different time scales, and the like.
But it is all good now. And I don’t know how or why that bug appeared or disappeared, I wish I did though.
There is, however one share (AAPL) that is gonna look a bit funny, but that was a real scenario we were dealing with not some data fluke. Apple, as you all must know, reduced the price of their shares to about $90 USD from the upper $500s. Now we had a conundrum here. Do we want to change the past? Could we? In a way -and that is clearly what all other applications have done- you need to change the past so your statistics make sense, specially if you are dealing with the stolidness of moving averages. But in our case with our Viracocha graph we don’t really need to, since we are dealing with the variation, so spare the few days after the change when variation will be great, it will then adjust to the new reality. So I don’t really know if we should change the other two graphs -the average price- and the -MACD-. The latter is a pure moving average and it is clearly misaligned, and that would call for a readjustment of the past I suppose but even that one will be fine after 30 days or so; and besides we have always considered that one to be just for reference and double checking. And with the average price, well that one is reflecting in our app what really happened to the share price, a bit of historical land-marking if you will.
So I am a bit undecided on AAPL. Like I said Viracocha graph is un-sensitive to this monumental change in a way, so that one is working fine.
It is time now that we can go to a deeper detail on our users. This is an analytic map that shows a world report of the cities in the world that have downloaded the application over the last couple of months. We are not ‘flappy chicken’ or wahtever its called but we a getting some movement.
We have a review for the application in DIY app review:
Also a facebook post:
And a tweet!
Is market speculation negatively impacting your portfolio? Vira can help! https://t.co/vtMf4uZcSG
— DIYAppReview (@DIYAppReview) May 13, 2014
Now we don’t really predict the future as the review kindly states, but we think that we give a pretty clear picture of the present circumstances that may be at play for a particular stock.
Flo Rida’s hit single started strong at No.1 on the charts along with the start of year 2008, and by the time it was Katy Perry’s turn at the helm all hell had broken loose and people were well and truly crying for mommie, I guess kissing girls were not very good for the economy. We are talking about the infamous GFC, a term that has successfully transferred from a noun to a verb as in ‘I was GFC’d up the A’ as a few Boomers have been heard whilst articulating their financial surprises in later life.
As it is the intent with our ‘Crash Courses’ we will put the data through the Viracocha (long for Vira) treatment and analyse the result. The context of the Global Financial Crisis is -I think- very well known, but I will do a brief story-telling here for the sake of grounding our post. This is mostly Wikipedia btw.
The U.S. stock market peaked in October 2007, when the Dow Jones Industrial Average index exceeded 14,000 points. It then entered a pronounced decline, which accelerated markedly in October 2008. By March 2009, the Dow Jones average had reached a trough of around 6,600.
IndyMac went down first, it filed for Chapter 7 bankruptcy on July 31, 2008. Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and Countrywide Financial, as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank Bear Stearns would collapse in March 2008 resulted in its fire-sale to JP Morgan Chase. The financial institution crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia, Citigroup, and AIG.
In a dramatic meeting on September 18, 2008, Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke met with key legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: “If we don’t do this, we may not have an economy on Monday.” The Emergency Economic Stabilization Act, which implemented the Troubled Asset Relief Program (TARP), was signed into law on October 3, 2008. I really loved Paul Giamatti’s portrayal of Bernake in the 2011 movie ‘Too big to fail'; and it is accurate to say that it was a dramatic moment when he said the “I have studied the crises in America” and then closes with “There will be no economy.” And the music in crescendo and all of that. So bring the 700 billion! Now I enjoy a good conspiracy theory as much as the next guy but I am NOT suggesting anything Ok? But it is to note that between the 15th and the 19th of September (5 trading days) there were an excess of twenty-five million shares traded in the DJIA, whereas the average had been at about 2 million per day, specially on the day after that meeting there were 6 million trades, nice.
Events though the Viracocha spyglass
This one was bit tricky since there was some bizarro-world backwards stuff happening between Event2 and Event 3. But I think there is an explanation for that behaviour as we will see.
Event 0. July 17. This is a get in signal, I placed it here because it is when the price (DJIA Points) curve goes back to expected variability after spending some time in the bottom there, but as with most cases it is actually an area (a Buy area in this case) that extends for a period of time.
Event 1. August 20. This is the last chance to get out, it is actually a ‘pretty please exit now!’ kinda scream. This is because not only the DJIA points peaked, but also both volume and points start to follow each other, in this case it is a classical ‘looking for the bottom’ scenario.
Event 2. September 12. This was a conundrum for me to shed light into. In one sense both volume and points are following each other upwards, so we should be looking for a ceiling right? Well I was proven wrong here, but my only saving explanation is that there were huge forces (to the extent of 700 billion huge) trying to steer the market. So the bizarro-world thing here is that there was no ceiling to go to, it was more like a plateau created with lots and lots of cash. As we can see the volume rose steadily as I would assume the banks under duress were moving shares like it was going out of business – wait… they WERE going out of business! But the DJIA points couldn’t be lifted high above the 2.0 mark, and then volume raises even more, and then the ass falls out of it.
Event 3. 28 October. It is over, well Vira is actually doing its job and saying that there is opportunity to go in as the DJIA points dipped so much, but I feel that it is safe to conclude that we were in a ‘wait and see’ kind of scenario by then.
The big takeaway message on this Crash Course is that when both volume and index (or price) are following each other either upward or downwards then there are changes at play that may lead to conclude that the market is looking for a ceiling or a floor… or that Paul Giamatti has spoken.
Other market crashes
I had an interesting conversation with a chap that is into Artificial Neural Networks. His goal is to design the ultimate ANN for share trading. There are, as you may know, a great deal of solutions already for trading in microscopic time intervals, trying to train machines to do it. Is is a real strategy and I guess there is money made there. But our path is different insofar that it still involves human interpretation of the reality of the market. But it is an interesting field none the less. From that conversation it became clear that there were a couple of things that needed clarification on the way we designed our VIRA application. The most contentious part of the discussion dealt with market equilibrium. My colleague’s view of the world was that if the price of the share is trending up, then that means that there is demand for the share. I had an uneasy feeling about that theory. There are several ways that this may unfold.
– If we think of equilibrium then one way to look at things is that the market is always in equilibrium when the transaction is done. So in a way it is in equilibrium and yet it moves. So how can this happen? Well, the equilibrium is the point in which, for that day the shares were traded at a particular price. So there was a micro-equilibrium if you will. But not for the entire market. So my colleague had the right idea in thinking that if the share price is trending up then there is demand. But for how long? Well that is the question.
– So let’s think of the unknown part of the market then. That is to say let’s think on the shares that were not traded, hence the ‘un-equilibrated’ part of the volume. This is precisely what we are showing in the VIRA volume graph. A proxy of the proportion of shares traded is the volume of shares traded for that day for that share. So if we can keep an eye on the trend of that volume then we can have a grasp on the momentum on the market, or in other words we can infer the equilibrium, or non equilibrium of it.
– So if the share price is trending up then you may have three scenarios volume wise (at least). We can have the volume up high too, which will confirm that there is demand for the share. We could have the volume trending low, which means that the demand is gone for that share, and we could have just a random or expected volume of shares traded which may suggest that it is best to wait and see – depending on whether you are holding or not -.
Here are the latest upgrades to our application.
VIRA Finance 1.2 – We just did the upgrade of the app to allow working with the new iOS7. If you have, like me, a device that is stuck in iOS6 then the best thing to do is not upgrade to 7.
And finally!! The free version of Vira.
When we fist launched Vira in October 2013 we had it free to download for two months, and we oficially started the paid version in December 2013. But in doing so we always felt that the free version was needed for a great number of reasons: We need a safe way for users to get used to the app before they commit to buy; we are introducing a new analysis tool that people are not used to and so a free trial was a logical thing to do; it is easier to get promotion and disemmination of tha app; and so on and so forth.
So here is the link to Vira Finance Lite. The only difference between this version and the full paid one (and by full paid I mean just $4.99 a pop…) is that the Lite version has a limited portfolio of shares. All the other functionality is there.
Here is a brief history of our Vira Finance releases so far in the Apple iOS.
Hello world! Our very first release, just for Apple iOS. We hit the Apple market first due to sheer economic reasons, and we learned along the way about how to and how not to put an app out there.
Then we had our first Oh s***! moment… the app crashed when presented with market indicators like Dow Jones, SP, Cac40, Nikkei, etc. Big doo doo moment. So back to the drawing board,
The market indicator crash was fixed, but indicators still couldn’t be displayed our VIRA graphs.
Market indicators now can be displayed in the graphs on some instances. It is to note that some indicators have price only (not volume) so therefore just showing half the story as far as we are concerned. But that is how they are found out there so we can’t really work around those ones.
1.X.X Coming updates…
The freebie version. We are close to