Portfolio

Star-gazing to pick stocks

Updated on: Jul 02, 2011

In every trader's life there comes a day when the market frustrates him to such an extent that he wants to throw all his books on technical and fundamental analysis out of the window. Surely some divine help would be handy in such days. Well, there are some in the market who actually look heavenwards to guide them in their trading and stock picks; not towards the gods, but towards the stars and planets.

You guessed it right, this column dwells on using astrology in trading. Purists, who are just about beginning to accept technical analysis as a legitimate form of stock analysis, would balk at the idea of using the movement of Saturn and Mercury to decide where Reliance or Tata Steel would reach tomorrow. If you thought that this was one of the quirks of the Indian stock market given our leanings towards ancient sciences, you would be wrong. Astrology in stock picking is widely prevalent in most global markets including the US.

One of the most notable technical analysts to use astrology was W.D. Gann, about hundred years ago. He was a genius who made huge profit from trading in the stock market. But his theories and methods remain inscrutable to this day. However, some of his charts have some astrological notations leading to the surmise that he used astrology in stock trading though his exact methods were not documented.

Investment advisors using astrology for recommending stock abound in India. Methods used for timing investment decisions and picking stocks could vary among these analysts.

The principal factor that these analysts track is the movement of the planets, the sun and the moon. These heavenly bodies would be moving in the 12 houses of the zodiac. Just as the stock market movement has fractal properties, the planetary movement also displays similar tendencies. The movement of these planets is charted on an intra-day basis as well as a monthly or yearly basis. These planetary cycles are one of the means through which astro-analysts zero in on the time when stocks can be bought or sold, even within each trading day.

Each planet is attributed with favouring a particular industry or sector. Depending on where any planet is placed at a given time (position of strength or weakness), the industry that is favoured by the planet will also do well or badly.

Some analysts plot the birth charts of every company, probably based on the listing day and time. Just as humans would go through a good or bad phase depending on the planetary configuration in his birth-chart, the stocks could also rally or slump based on its birth chart.

So analysts would time their buys and sells based on these individual charts.

It is of course a given that astro-analysts would be keeping an eye on the stock's fundamentals and tracking technical charts too to support or augment their recommendation.

While technical analysis is based on past price movement which, in turn, is influenced by the fundamentals of the stock, economy et al, astro-analysis does not have such fundamental moorings. Perhaps that is why this form of analysis is yet to find a place in the mainstream despite being around for over a century.

It would be unfair to comment whether this form of analysis works or not since I have never used it. That planets and stars placed millions of light-years away in the milky-way can influence the movement of Unitech is a little hard to stomach. But then, the realm of human knowledge is limited………

Published on July 02, 2011

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