Sunday, January 31, 2010

Market Break Down - follow up & commentary

Last week my post was headlined "Has the Market Changed Character ? More Downside Ahead ?" and linked to some interesting reads on the topic.

Well, it looks like the market has indeed changed character vs. the relentless up move since the March 2009 lows. It seems to have broken down (Dow below 10250, S&P below 1100 & 1080, Naz below 2200).

Where from here ? Who knows, it could be a bounce up; it could be more downside; but its probably not back to the races.

Here are some links to some really good commentary and webinars: (download the Jan 28 and Jan 20 webinars)

from the mad hedge fund trader:

1) At the Friday (Jan 22) close, technical analyst to the hedge fund stars, Charles Nenner, put out his long awaited sell signal on the S&P 500, with the market’s definitive break of the crucial 1,125 support level. From here you sell into the rallies. The SPX is going to plunge 10-20%, Treasury bond interest rates are going to soar (TBT), and gold (GLD) has peaked out. There are tradable shorts setting up in all three of these markets that will run for the first half of 2010.

These calls are the product of Nenner’s proprietary Cycle Analysis System, which he has spent three decades developing, and generates calls of tops and bottoms for every major market in the world. I have diligently analyzed Nenner’s approach for a couple of years now. It appears to consist of multiple overlays’ of traditional technical analysis, some mathematically derived time and momentum indicators, and a dash of Elliot Wave for good measure. The result is reliable enough to make a living, as long as you learn how to read him and don’t bet the ranch (or the windmill?) on any single trade. Nenner sees a trading rally in the dollar setting up which could deliver a strong greenback until May, when we should then re-establish shorts, especially in his favorite, the Australian dollar (FXA). The scientist turned technical analyst argues that major bull markets in wheat, corn, and soybeans will begin this year, sectors for which I am also hugely bullish long term. He sees natural gas (UNG) retesting the old lows at $2.40.

Farther out, Nenner sees a new major bear market beginning in 2013 that will take both stocks and bonds to new lows. Nenner has a long career that includes stints at medical school, Merrill Lynch, Rabobank, and ten years as a technical analyst at the noted vampire squid, Goldman Sachs. To learn more about the approach of his firm, the Charles Nenner Research Center in Amsterdam, please visit his site at To hear my in depth, extended interview with Nenner where he outlines all of his views for 2010, please go to my website by clicking here .

Same guy on Jan 29:

News Flash: As I write, the S&P 500 has broken the 50 day moving average, an event that usually presages larger falls to come. Of course, you already knew this was going to happen when Charles Nenner warned you in his December 12 interview with me on Hedge Fund Radio, when he gave an exact date of January 7 for the market peak. He predicted that the market would fall 10%-20% from there. I reminded you again in my December 16 summary of the radio interview (click here ).

I gave you a heads up one more time with my January 4 Annual Asset Allocation Review with my piece entitled I’d Rather Get a Poke in the Eye With a Sharp Stick Than Buy Equities. As it turned out, the S&P 500 peaked on January 11, which is close enough for government work. The Euro has also broken through to the $1.39 handle, and the dollar surrogates of crude, gold, and copper are also weak, as they should be in the face of a carry trade unwind. Commentators are blaming Obama’s State of the Union speech. The reality is that stocks were just too damn expensive, can’t be justified by the economy’s weak fundamentals, and only got this high because of the free money given speculators by the Fed. Since everything else Charles forecast is coming true, you better listen to his interview on Hedge Fund Radio one more time by clicking here


I am posting these links b/c I think they contain good, thoughtful analysis of market conditions and possible near term scenario's. Keep in mind that they can be wrong; however, these are the views of some very successful traders and technicians, each of whom has a different approach, yet a similar macro view (but are open minded enough to not be wedded to their most likely outcomes).

Food for thought for the active trader / investor.

Good luck in your trading.

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