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Business & Strategy

 
By : Mathew Cherian, Research Associate/Analyst, Western Michigan University
Industry : Asset Management Functional Area : Derivatives
Keywords :

bond market

vix

Activity:  2 comments  319 views  last activity : 09 19 2010 08:27:20 +0000
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 Lead forecast for daily Stock Market movement

 Modern technology and information decimations has made it much more easier to predict the daily movement of stock market before the market commences. If one has a Bloomberg terminal all the information is available on a split second basis and it is expensive, only high networth investors will be able to afford it.

 Small investors can use the free service available, like the internet and financial news provided by stock exchanges and financial dailies.

 Three important leading indicators are,

1)      The ‘vix’ index of USA. It is the volatility index which gives the implied volatility of the market. If this goes up on any particular day in New York Stock Exchange, then the probability of the markets going down elsewhere is close to 1.

2)      When one gets up, the financial daily in your doorstep can tell you if the Bond prices have gone up or down. If it has gone down then the probability of the market going up is close to 1 and vice versa.

3)      Last but not the least, is the ‘delta greek’ of Options. One can keep a representative company and check up if the movement of the price divided by the movement of the option is close to 1 or greater than 1, in which case too the probability of the market moving up is close to 1.

4)      The other indicators are international gold price movement and oil price movement which are positively correlated to the stock market.

 All these prices can be available before the market starts, the first three are very reliable and it can make a difference in ones investment decisions.

The interesting phenomenon is almost on days these indicators give good signal for the Indian market.

 
2 comments on "Lead forcast for daily Stock Price movement "
  Commented by  NATTERAJA R. ARIKRISHNAN, Area Sales Manager, HPL INDIA LTD, CHENNAI    | 09 19 2010 08:27:20 +0000
Good information on share market.
Thanks for the referral Mr.Mathew Cherian Ji.

  Commented by  Shirish Beke, iDEATiON, Management & Financial Consultants    | 09 07 2010 22:26:09 +0000
Thanks Mathew I liked this
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