Charles Nenner, Technical Analyst to the Stars, Gives a 2011 Forecast

madhedgefundtrader's picture

My guest on Hedge Fund Radio this week is Charles Nenner of Charles Nenner Research in Amsterdam. Charles hails from Holland, and has a long career that includes stints at medical school, Merrill Lynch, Rabobank, and ten years at Goldman Sachs. He has spent three decades developing his proprietary Cycle Analysis System, which generates calls of tops and bottoms for every major market in the world.

Charles developed a huge following after 2007, when he accurately nailed the top in the Dow at 14,500 and urged his clients to put on short positions when everyone else was predicting that the market would keep grinding higher. I have been following Charles daily research reports myself for many years, and found them to be uncannily accurate. Most recently, Charles predicted the last sell off in stocks, missing the exact April 25 top by only one trading day.

Today, Charles Nenner counts major hedge funds, banks, brokerage houses, and high net worth individuals among his clients. You can find out more about Charles’ work at his website at www.charlesnenner.com. Today’s, Nenner gives us his technical view of the world’s major markets. Below, I have broken down Charles’ bespoke analysis by asset class.

Equities

Nenner sees multiple peaks developing in a number of equity indexes coming at the end of January. He is still long the S&P 500, which could run as high as 1,480 in a best case scenario. He will sell his position if the SPX trades below 1248, or by January 25, whatever happens first. Germany and the US will be the equity markets of choice during 2011, while emerging markets are to be avoided. Bank of America (BAC) may have another week to run, maybe ticking at $14.70. Chinese Internet provider Baidu (BIDU) is a buy here at around $100 and may have another 20% left in it. Charles is not a believer in Cisco Systems (CSCO), so I wagered him a case of the fiery Dutch liqueur, Bols, on the outcome.
 
Bonds

The wily Dutchman sees an 18 month bear market in bonds that we all should be trading around. Ten year yields will balloon up from the current 3.40% to 4.20% and the 30 year may see as high as 5.30%. Then in 2013, he thinks we will see another dip in the economy, a resurgence of deflation, and a huge rally in bonds that will take ten year yields all the way back down to the 2010 low of 2.0%.

Longer term, he sees rates going up for 30 years, reaching the stratospheric 13% we saw in the early 1980’s. A great way to play this will be through the leveraged ETF (TBT). Short term he thinks we could pop back up to $41, where he wants to take a trading profit. After that, you should be buying every dip for the next 20 months.

Commodities

Nenner’s copper target (CU) is $4.82 by the middle of April, up 9.5% from today’s $4.40 . Other commodities have already seen most of their run. Regarding oil, he sees a short term top around $92, and wants to buy it back and the end of January around $85.50. His multiple year view has it going all the way up to $200, hence his pick of ExxonMobile (XOM) as a favorite equity play.  Of the independent oil producers, Charles like Occidental Petroleum (OXY), which he thinks has another 10% left in it.

Grains

Nenner is hugely bullish on the grains, with wheat as his favorite. He argues that the essential foodstuff could rise as much as 38% to $13. Corn is looking good on the charts. His views reinforce my own theory that the world is making people faster than the food to feed them. Short term, the agricultural ETF (DBA), is peaking, but long term could reach much higher. The grain ETF (JJG) should appreciate until April and could print $56.20, and could keep running all the way into 2013.

Currencies

There is weak rally in the euro to $1.35, where he wants to sell it for a move to the $1.10’s. The Australian dollar (FXA) is reaching a major long term top, and tighter stops are warranted. The Japanese yen (FXY), (YCS) is on the verge of making a major long term high, and Charles is looking for good entry points on the short side. An initial 22% depreciation from ¥82 to ¥100 is doable in 18 months, and could take the (YCS) up 44% from the present $16 to $23.

Precious Metals

Gold is also topping around $1,440, as is silver around $31. The barbarous relic looks a lot more interesting around $1,000. He is buying deep out of the money puts on the gold ETF (GLD) for pennies, looking to make a killing on the coming sell off.

Summary

What would Nenner do with new money he received today? What are the cleanest trades out there? It’s very simple. He would sell the next two point rally in bonds through buying the (TBT). He would buy any dips in the grains, crude and the dollar against the Euro. He would sell any breakdown in the Australian dollar. Finally, he would be laying on big shorts in the Japanese yen right now.

To listen to my interview with Charles Nenner on Hedge Fund Radio in full, please click here at http://www.madhedgefundtrader.com/january-10-2011-charles-nenner.html .

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

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fundmanagernews's picture

Nenner got it very wrong in that he expected a correction in 2010 (fall).  That was a brutal call.

jeffgroove102's picture

Charles Nenner sounds like a purely technical guy to me. I think the case for gold is best expressed in the prisoner's dilemma of game theory.

Here is a great interview by jim puplava at financial sense.

http://www.financialsense.com/financial-sense-newshour/big-picture/2011/...

I think the only beef I have with guys like puplava, is how dewey eyed they get over supposed great prez's like ronald reagan.

realitybiter's picture

It is mad for madhedge to even give this cat airplay after his 2010 miss.  Something about short everything in January...it was awful.  The interview is there for anyone who want to hear it.  Simply flawed.  http://www.madhedgefundtrader.com/december-12-2009-charles-nenner-and-th...

He did get the grains right, though.....horrible on equities.  TBT was a really bad call.....(although it will be right someday..now?)

mogul rider's picture

Better yet sell the fukin derivative and get physical in everything.

You'd be much better off than buying puts, calls, and every other POS paper trade.

 

When nothing is real you best be getting real or have your head handed to you. When this long emergency is finished in about 8 years you'll be very very glad you did. I was reading my great great great grandfathers diary which was done in the greatest depression which is the late 1800's.

 

The only thing that mattered was our precious. You starved without it and prospered beyond imagination if you had some. Buying plantations for coin.

 

You'll buy Beyonce's mansion for a couple silver eagles

mogul rider's picture

I love everything he doesn't.

Can I have my comission now please. You know what?

Ask any one of the dopes where they were in terms of investment strategy on August 7 2008.

 

That'll tell who's full of shit. Which is pretty all of them

 

Bob Moriority at 321gold

Bob Hoye

and a bunch of old fellers around 321gold were the ONLY ONES! who told us to get out.

Everyone was a talking head.

Noise. nothing more

AGoldhamster's picture

August 26 ... gold is risky right now ... fact is gold went from 123x up to 142x.

Furthermore: in december gold is a buy again ... fact is in December gold was already topping and is now around 50 of the highs

April 20 with gold at 1133 he said gold is going to be under pressure into the summer ... fact is gold went up into end of june, made a low july 28 at around 1160 and then just went up and up.

Jan 27 when gold was around 1088: "He warns those concerned about inflation are premature so don't "get too enthusiastic about gold." According to his research, gold will put in an important long-term high in the next few weeks.  Looking a few years out, gold may once again rally to new highs but investors could get burned in the meantime". Fact is gold went up almost the whole year.

At least for gold his forecasts were definitely worthless.

But also on bonds Jan 27: "He predicts the recent rally in bond prices is only temporary and will soon reverse in a major way.  Echoing statements he made here in October, Nenner firmly believes "for next 30 years rates will only go up" so get out while you still can." ... Fact is Bonds made a HUGE rally from April into October and are still higher than January ...

Not worth the time to continue research ...

BlackSea's picture

I remember a certain Gold Hamster on another board saying "we are through" a while back right before gold really broke out. Nice call then as with others before... <g>.

As for Nenner, in my oppinion there's nothing more to demonstrate on his gold predictive abilities.

 

Revolution_starts_now's picture

The market is broken, plain and simple. The price discovery mechanism was disabled back in march of 09. You can't use technical or fundamental analysis, insider information is the only thing accurate anymore and even that will have a problem as risk rises.

 

People are trying to use what worked for the last hundred years, in a market that is clearly disconnected from anything that has been done in the last 100 years.

Just because those with a vested interest are acting likes it's business as usual, doesn't mean it is.

If you don't know what the fed will do, and it seems the fed doesn't even know what it's going to do, how do you know what the market will do?

The outcome from the fed doing QE3, or not doing any QE at all are night and day. Not to mention that even knowing the plan say QE3, is it the straw that breaks the camels back? it very well could be.

All I see in the market is risk, risk that is covered up and hidden. Risk is the only thing that I would bet will rise, even if nobody notices, risk will still rise.

It's getting late and we have been at the craps table letting it ride for a long time. The odds themselves say the outcome will only get harder to define and the risk will continue to rise.

Quinvarius's picture

Nenner is an idiot. He made one prediction that worked.  Just one.  Everything else has been a complete train wreck.  His record is worse than an Elliot Waver.

Chappaquiddick's picture

"I vorked at Goldmine Sachs for 12 yervs!" (ergo I must be pretty shit hot,ya!?).

Of course he never talks about why he left.  Story goes he got caught ballet dancing on a chess board with a bunch of chicken bones - so they fucked him off.

He had no option but to set up his own company up as he was completely unemployable by that point.

BlackSea's picture

Yes.

I remember him on Bloomberg in spring of 2009 talking about a rise of the S&P to 850 and then plunging back to under 500 that year.

Dr. Dre's picture

nenner is a bit of a Kook...

if you watch his calls, he makes a lot of sense so I studied his forecasting methods... its a bit wakadoo -- you look at the derivatives of equity price movements and then, mathematically, "fit" different waves to them. Then you fit bigger waves to those waves.. and so on.  Eventually once you have these waves mapped out based on historical volatility... you then can extrapolate where these wave patterns go over the coming monhts...  He calls it "cycle forecasting"  -- its a little of his own computerized elliott wave stuff except its broken down into months, quarters and years..  .. not decades.  if you doubt me you can google it yourself -- there was some video I saw on a speech one of his partners did and explained it all.   

look.. its one more indicator... but it ignores fundamentals, reality, sentiment etc etc...  its the astrology of the markets... we WANT to believe.. but chances are throwing darts may be just as (if not more) successful... sorry charles - but I am an honest type...

Chappaquiddick's picture

HE'S A CUNT!! (Not you - Nenner!)

gwar5's picture

I'm going with the Hindenberg Omen thingy

I just saw a mock up of it done on Mythbusters and it was the bomb

Cdad's picture

I find all of these projections to read like something someone should have done six months ago.  I don't think they will play all that well in the next six months...with perhaps the exception of his gold call...which I think is not ambitious enough.

Sorry...but I don't much cotton to folks who call yesterday's action tomorrow's prediction.

lynnybee's picture

Mr. Nenner !!  Now, here's an article I can really get into !  .......... luv Charles Nenner !

Orly's picture

I had been a big fan of Nenner since seeing him on CNBC many moons ago but lately, he has indeed, "missed it by that much".  Robert Prechter has also pulled an Agent 86 and claimed, as has Nenner, that the Fed pumping money into the markets has skewed his cyclical forecasts.  They will still occur, we just aren't sure when.

Perhaps, but that doesn't stop them from not being wrong about the timing and we all know, it's all about the timing.

Rasna's picture

Orly,

Where did you read this?

I would be amazed.

Orly's picture

Actually, I heard it on television.  Thinking of it now, I really can't say for certain if it were Prechter himself or someone else who mentioned Prechter's name.

That having been said, I stand corrected in that I cannot say for certain if Mr. Prechter said this directly.  I searched for it last night but couldn't find the exact quote and he is very good at evading the direct answer to the dorect question, so thinking about it, I doubt he did say this.

I apologise.

I know for sure that I heard Nenner say this or read about it in an article.  Or he mentioned in the article that Prechter thought this as well...

Man, I don't remember.  If you're anything like me, you read way too much of this stuff!

/:

Rasna's picture

I aske Prechter over a year ago how his forecasts accounted for the massive Fed intervention in the market that was causing the S&P et al to levitate...

No answer.

bonddude's picture

Was waiting for his crash last august.

The next ROSIE in the making.

Quinvarius's picture

And even though the Fed has been blowing up Nenner's and Prechter's forecasts, they keep making the ones over and over.  Nenner called the top in gold in March of last year.  And here he is again ignoring an even bigger money infusion than anyone even knew had taken place last time.  If he is sitting on puts that are worth pennies, he rode them down to pennies.

Eternal Student's picture

That's funny. I can't believe that Precter actually said that. His whole thesis has been all encompassing, so now it's not? I guess you can teach an old bear new tricks. Almost as funny as his bowing to an astrologer as being the most accurate forecaster around.

Chappaquiddick's picture

Well there's another one.  Bobby P - ULTIMATELY there will be an uber bear market, if the NIF doesn't make it onto the grid because of a global melt down.  The peak oil and economic and ecological issues probably will overwhelm the science before that 1.4Mln Horse power water burning NIF can save us from energy poverty.  If that does happen then the hyper-bubble described by Nicole Fosse will go pop and take everyone and probably everything with it - at which point Pretcher, no doubt by morse code on what's left of a CB radio will be tapping out "I...T...O....L....D...Y...O...U....S...O...." 

Eternal Student's picture

Well, even a broken clock is right twice a day. The real question is "when"? And that's something no one is able to predict accurately. Though many claim otherwise.

Chappaquiddick's picture

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loup garou's picture

Early last summer, Nenner predicted that stocks would top in September, then decline to a “significant low by Christmas“.

(As Maxwell Smart would say, “Missed it by that much.”)

More recently (about a month ago), he claimed that ‘high sunspot activity is causing people to be optimistic these days'; but the reduction in sunspot activity over the next couple years will cause people to become pessimistic again, that the Euro will fall apart, and the Dow will go down to 5,000.

Now, indeed the Euro might fall apart and the Dow might decline to 5,000, but that doesn't change the fact that the guy is a kook.

(And, yes, Nenner was on the payroll of the Squid for a dozen years or so.)

Chappaquiddick's picture

He's full of shit - I've watched him on TV and can't recall anything that he said that materialised.  Just random numbers - I'm making better calls than that twat.

In fact the last time I saw Nenner was in the 38% retrace following the flash crash where he stated on a national channel (CNBC I think) that the DOW was headed to 5000.

What a wanker.

In fact go to his website and watch the clips he puts up of his TV appearances - talk about a contra-indicator.

covert's picture

fantastic! this is the best, keep it coming.

http://covert2.wordpress.com