One of the core advantages of looking at a group of assets is that one can combine non correlated and diverse components. This is what we did when we added NCDEX agro commodities to the 1000 asset global group. For us at Orpheus, the real comparative benchmark is not only intermarket (whether the asset is agro based or equity based) but also where it stands in terms of absolute performance on a comparative scale.

The aim of the exercise is to look at outliers. The top performers among the group have diverged out to an extreme and hence should reverse and the worst performers have pushed to a lower extreme oversold level and hence are likely to outperform the rest of the group components. Worst and best are illustrated with a percentile ranking, which are dynamic and create our Jiseki Time cycles (seasonal patterns of strength or weakness in assets). The performance percentile rankings range from 0 to 100.

Currently among the NCDEX agro assets, Guar Seed is a top performer which also ranks 80 percentile among a large global group of assets. 80 percent is high ranking for any asset whether it’s a local agro special or any other asset. High quarterly rankings are not sustainable for a continued period.

For example when Guar was sub 20 percentile rankings in September last year, it was a worst performer which could not stay low for long. The agro commodity has risen more than 100% in the last 12 months. Now Jiseki cycles have given a short term crossover and even the price structure seems like an ongoing corrective. The Jiseki cycle suggests that Guar Seed is ready for a high and reversal at least on a multi week basis. Every upside in Guar should be used to exit and reduce not because the commodity has a multi month rise behind it, but because it has topped performance on a quarterly basis. The performance of the commodity has reached an extreme. On the worst ranking extremes NCDEX has Masoor and Mustard offering multi month accumulation opportunities, but that’s another story.

Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research