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Nic Lenoir Turns Bearish With Conviction
From Nic Lenoir of ICAP
Bearish with conviction
All forward looking indicators point to severe economic weakness, I am talking recession here, not just a sub-par 1.5% growth. Most economists like my friends Julian Brigden and Jonas Thulin who do cycle analysis using leading indicators have highlighted this much more eloquently than I could quantify my bearishness which in economical terms is the summation of a lot of observations but lacks the timing and numerical dimension they can provide. The following link I found very interesting in that perspective:
http://theautomaticearth.blogspot.com/2010/09/september-28-2010-graphic-peek-into-our.html
Where my timing leaves less to be desired is in terms of technicals. 3 weeks ago now I recommended buying VIX calls, specifically I like the 37.5 November expiry calls. We had a signal in VIX to sell stocks with a reversal outside the bollinger band, which historically precedes the highs in stocks. The lag has recently been 7 to 10 business days, but I was definitely open to a longer lag this time around since there are many people trying to get involved from the short side and the specter of the Fed and the plunge protection team looming. That is mainly why I suggested buying November expiry and wait before getting outright short.
After observing the price action a bit more and reflecting on the patterns, I have come to the conclusion that the market will top between 1,155 and 1,164. In that zone we have in order the top of the channel (120-minute chart) guiding the consolidation since July, the 61.8% retracement of the sell-off since April's highs, the resistance joining the 2007 tops and the 2010 tops, and the C=A of the correction start in July (daily chart). I add to that relatively convincing divergence and the incapacity of daily 21-RSI to bypass 60 which is an excellent confirmation of a correction in bear market and not a new bullish impulse. Gathering all that and adding to it the VIX signal we had early in September, the economic mix which is turning very sour, the start of trade wars, the ever present sovereign default crisis in Europe, the common knowledge that bank balance sheets are marked to solvency and the housing double dip, and I think it's fair to say the pricing for the major equity indices is rather generous. I did say yesterday that it all starts and ends with the USD. Well, the attached chart says that based on M2 EURUSD is headed back to 1.10 or even parity, and USD bullish sentiment according to CFTC is pretty much 0%. We also had Fed speakers on the air today saying that more Treasury purchases may not be the answer.
I will have much more on M2 considerations and currency valuation in the next few days but I have not yet sufficient proof to support my theory. When I do I will share!
Good luck trading,
Nic
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Die, AAPL!
1200 coming up on bogus GDP +3.1%. Why should they stop lying now?
I can safely call the top in AAPL. Due to the cat that they opened a store in Spokane WA. Gateway did this=toast, Keytronics, Future Shop, Circuit City... Shall I go on? Notice that DELL will NEVER open a store in Spokane. AAPL will be like MSFT hovering in the 20-30 range for eternity
Great, another bufoon calling "the top". Help me out, when did he tell us to buy?
Sherman, where is your credibility? Nic has actually been one of the better guys to follow. Once you post your predictions on a daily basis for all to see, then throw some stones.
Nic has been one of the better guys to follow? really? you mean here on Zerohedge, whose general thesis has been to short SPX since 666. And even if you paired that SPX short with long gold (good call ZH), you'd still be down HUGE!
I think Nic makes his mind up on a little shorter time basis than that. I've actually never seen Zerohedge outright advocate shorting the SPX - more just trying to illustrate the farce that the American economy has become. Good money management and having a good bullshit detector can be mutually exclusive for months or years at a time.
I think Nic advised buying in early August.
that's fair. I like Nic's posts; just feeling "punchy"
"You'd still be down HUGE!"
There goes the credibility. As a simple manipulation with any stock chart show, going short SPY at 666 and going long GLD at the same time would now result in a loss of about 15%.
Inconvenient, but hardly "HUGE".
And SPY isn't done falling, by any stretch of imagination, although timing is uncertain. So, as of today, this trade looks quite attractive.
Nic is a technician and evidently there are a lot of techinical indicators that point to the market going lower or so I'm told.
What annoys me is that he doesn't put a lot of fundamental analysis in there. Like what's going to happen to the market if the Fed pumps in another 1 Trillion in liquidity? Nic doesn't have an answer for that.
For some reason ZeroHedge keeps believing this guy has skill. I have yet to be impressed.
And, frankly, you can throw all TA and FA out the window when the only participants in the "market" are PDs flush with POMO cash.
He just did.
" buying November expiry"
Wow...you can't be serious.
http://www.zerohedge.com/article/get-your-risk-double-dip
and there is one prior to this that I simply don't feel like looking for. Pay attention.
"On the daily we see that the C = A target is all the way at 1,163... I don't know that we will necessary get there but it is one of the risk. I will be looking to sell this move once it starts showing exhaustion (read divergence!) but for now I would be out of short equity positions. "
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
“For the immediate future, at least, the outlook (stocks) is bright.”
- Irving Fisher, Ph.D. in Economics, in early 1930
To be fair it was Tuesday, August 31 within 20 minutes at and just after the market close when a buy for 200,000 EMini SP was placed.........there is more but the 'fix' did turn the SP up from the 1040 and Dow from 9950/10,000......
The 'fix' to close shorts and get long was also noted by RobotTrader.
Shorting this market is more dangerous than being long - who are the sellers? Fing retail is sold out - do ya think that Hugh is gunna bang the spoos? Unlikely.
The first chart was taken from the Youtube moron who says the Stupid & Pissdrunk index is going to 100.
F### off Nic Lenoir. F### you and the keynesian donkey you rode in on.
edit: my point is if you think technical analysis will give you an edge in this rigged market, you deserve to lose your ass
Agree, TA is the biggest pile of shit I have ever known.
Here's a BIGGER PILE for you.
Number 1 answer.......technically speaking........very, very nice technicals
Rocky........you giving wb7 a run for the money?.........love pictures........so much easier than having to read words.
im sure anyone who has been in the market over say 5 years knows what that line is.... its not just EP on youtube... tho im not fond of the 100 call
Don't buy, don't sell stocks: buy gold and swiss francs.
I don't understand why Mr. Dickus has rec'd 22 junks. Aside from the egregious profanity, the man has made a great point. Plus, he's got the best avatar of any of us. Not sure where he got that picture of Mrs. Ferguson but I don't really mind him using it.
Maybe because he claims Nic took his chart from a moron on youtube and stated he was a keynesian. How is he a keynesian? BTW I didn't junk him.
Conventional technical indicators do suck ass.
Proprietary ones, however, do not.
Quick guide:
1) If an indicator looks like detrended price, it's crap.
2) If an indicator flattens out on the upper or lower ranges of its scale, it's crap.
3) If an indicator is based on lagging inputs (moving averages, etc..) it's most certainly crap.
I know that knocks out a lot of the conventional ones. Sorry, just the way it is.
Which technical indicators aren't lagging?
The ones that aren't flogged to death on every financial blog on the internet. Proprietary indicators that are modeled after characteristics that don't have the 'crap' flags I mentioned above.
Yes, they do exist.
An example?
Given its nature, I thought that would be self-explanatory.
http://www.merriam-webster.com/dictionary/proprietary
Just saying they exist, and no, not about to share.
I was thinking along the lines of one that was being marketed, and it was not my intention to get you to share your personal one.
2. something that is used, produced, or marketed under exclusive legal right of the inventor or maker
The only technical indicator that is not lagging is price. Every other indicator has traps and pitfalls because they are derived, extrapolated and rendered from price, inherently yielding a delay in the function of the mathematical model. Candlestick patterns are a picture of the one indicator- price. Learn to identify certain candle patterns and you're already two steps ahead of the game.
The best you can do is try to assess the "mood" of the market to time your entries and exits. One way to do it is with the Center of Gravity indicator and the Awesome Oscillator.
When trading, try to find the indicators that work for you and your style. Remember to find a way to use indicators in ways most traders don't, which will give you an edge. As soon as most traders use it, it becomes moot.
:D
Thanks for the advice. I have my own system of trading but am always looking for ways to improve which includes looking at different ideas not neccessarily to copy them but to perhaps spark some new ideas. I always enjoy reading your comments.
The link to automatic earth graphs is excellent.....thanx.
The article on AE is excellent.
My main takeaway is that the 91-day CMI leads S&P by around 6 months, so if you're putting on positions using macroeconomics as a guide - like going short S&P because of housing markets, unemployment, consumer spending, i.e. reality - make sure you can wait at least 6 months for the trade to turn your way and overwhelm the pumpedy doodah antics of Feddie Ben and Mordor on the Hudson.
sumo, I 2nd yor opinion it is an excellent analysis for the Bear side.
I always appreciate your insight. Some of my favorite posts here
Thanks Nic.
this article written many year ago might well have been written today:
http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=McFad...
Great link. Thanks.
Nice work, Nic.
The game's afoot. If a shred of rationality exists in the marketplace, the next 60 days should see the shorts exultant. On the other hand, if 1170 can be broken, we should all just admit defeat, and the triumph of manipulation.
Ms. Cleo's long lost retarded brother. What the fuck am I supposed to do with this drivel? Honestly, do people get paid for this shit?
All of you complaining about Nic should go back and check his previous posts. This guy is one of the best. Thanks Nic as always a good job.
LOL, right...how far back am I allowed to go? Something tells me his accuracy is just round-abouts 50%.
As far as you want, he isn't perfect but a lot better than most. He warned on being short for these last 2-3 wks.
I thought this market didn't trade on fundamentals.....nor technicals for that matter. All you need is the POMO and Leo, and the market is green forever.
Nic- I dig all of your work but I have to think at this point obama (not worthy of a capitalization) and his Hee Haw gang will allow a minor correction for credibility - but the range has been set - do you see a break of 1040? I used to but I would not be surprised if the gap around 1121 is all that we be allowed by our "
leaders"
Why would they "allow a minor correction for credibility?" They are about to light a match at a gas station with EVERYONE BEING SHORT. COT tells the story. Everything you read here on zh is out there and levered short accordingly.
Do you ignorantly believe the Fed and Treasury don't have their own GS tech's to know when to light the match? This is an issue of national security and they will not allow the populace to believe the US is dead. After all, all j6p sees every day is a green market and those who talk against it look like idiots.
At some point the POMO will simply function as the dumb money that isn't in the market any more.. thanks US taxpayer!
Exaclty. All folks want to see is their portfolio "go up." Follow this up with the still ever present mind fack that ALL STOCKS GO UP OVER THE LONG RUN and they go back to watching tv
"automatic earth" LOL! Give me a break.
"Stoneleigh" More like "Stonedoutofhermind"
Somebody give Chumba Wumba a break.
http://annarborgrocerydelivery.com/shop/images/kitkat.jpg
"USD bullish sentiment according to CFTC is pretty much 0%"
The worrry here is that retail is very long dollar from the sentiment indexes especially on USDJPY and USDCHF...
IMVHO The costs of short selling are too great for me to want to do it, except in a confirmed bear trend when a fave such as C or FNM is imploding but hasn't fallen yet. (But unlike in a more honest age, look what the authorities put short-sellers through in 2008 when the shorts were really, really right.)
If one of the gods of short selling, Bill Fleckenstein, got entirely out of the short business last year, and is only nibbling (so far as he says) at most on the short end, I'm going with his hypothesis which is that the stock market probably continues to bounce in a wide trading range, and I therefore conclude that it's just not worth it to guess which way it will bounce when.
I'd rather try to find an undervalued precious metals miner or even bravely speculate against a Mad Max scenario by buying a muni that yields enough to make it maybe worth buying.
Goddamned trolls showing up here every fucking night about this time filling the threads with garbage. Go do something useful....weave a basket, walk in traffic...whatever.
Just go the fuck away.
dupe
The key element about these charts (esp those on the automatic earth link) is that the world's at a pivot point, squat on the goal line. The market's a cocktail made of time and price and the time bottle is empty. It's almost binary, expansion/contraction, red market/green market and on whichever side destiny breaks, by golly jumpin gee, she's gonna break bones.
I enjoy and appreciate your input Nic. Thanks for contributing.
As to your comment..."the 61.8% retracement of the sell-off since April's highs,"
I would note that the 61.8 retrace is SPX 1140.
Thanks as ever Nic for your thoughts which I enjoy reading.
Nic's been calling for 825 SPX for over a year. But don't worry, everybody reads Nic. More bs to shake out the weak hands.
Chart: CAD/HKD
War by proxy? As they say..."We shall see."
http://99ercharts.blogspot.com/2010/09/cadhkd.html
Chart: DX
Double Bottomed Dollar.
http://99ercharts.blogspot.com/2010/09/dx_29.html
POMO oh POMO, Where art thou POMO!
Nobody can protect Humans from themselves.
Thank you Nic for the conveyance.
Lament of the Stocktading Mariner: "In the hold of every sunken ship, you will ALWAYS find a chart."
Enjoyed the piece - looking forward to your proof. Just finished watching 'ole Kudlow and gotta say he had some clear thinking dudes on. QEII is bullshit and everyone knows it. Its like throwing a grenade thats glued to your hand. Everyone Ben knows, loves, trusts, hates, and has respect for will perish if he pulls that pin......but its like electricity following the path of least resistance if even for a short trip, I think he thinks he's gotta buy time. Its always worked before, right? Remember, I'm loaded for bear with VXX, so consider the source, 'ya know.
This time it's different
The market is getting stronger, not weaker.
Oils took off today.
If the financials turn around, bears are going to get destroyed.
McClellan and Summation on NYSE still going up.
http://stockcharts.com/charts/indices/McSumNYSE.html
Bears are still standing in front of a rolling train picking up speed.
Robot-douche, you suck moose cock
Nic- Normally I admire your posts, but "da boyz" can make the chart look like anything they want to. After all, aren't all the indicators lagging?
If you can call the turns in advance, you are either psychic or implicated as an insider.
Leave the guesses to the chat boards or pick the winning lotto numbers.
With the exception of GMCR, there are no signs of weakness in the IBD Top 100:
http://clearstation.etrade.com/cgi-bin/bbs?post_id=9505972
Gary Kaltbaum is still upbeat about the market, but he's looking for a 3 - 5 day pullback.
http://archives.warpradio.com/btr/InvestorsEdge/092918.mp3
And there never will be untill there is. If buying extended stocks was effective IBD 100 circa March 2000 would be a riot.
For a girl you put out some really good stuff......hmm......I can keep getting it......right?
Agree on the pullback then a continued ramp up until late Nov. - Dec..
On what planet does that chart mean market is going up? One ends barely up and one ends barely down.....is this that "new" math my kids are complaining about?
Chart: SPX
Diamond Top?
http://99ercharts.blogspot.com/2010/09/spx_1051.html
It may finally be time to Kick Out The Jams.
http://www.youtube.com/watch?v=8XhQRFO4M7A
Pardon me...
If the stock market is rigged, fixed, or otherwise no longer connected with market forces, isn't all technical analysis really just bullshit? uh... bitches?
BTW, that other guy stole my persona, so bite me.
Nick,
Not sure if you respond to comments...but thought I will give it a try.
What has been keeping me from entering the short side with full force is that the credit is way too cheap and there is no way the equity or the FX markets will have a major re-tracement without a significant deterioration in the credit markets. While you mention cycles as the basis of your current conviction, should'nt one wait for deterioration in credit for confirmation before stepping in?
Thanks
why do the Zh knuckleheads have to disparage everyone who takes a position in something other than gold? Almost all the BS artists like turd ferguson (i pick on him because i see his disparaging comments ALL THE TIME. get a life Turd!) are just out there bad mouthing someone with an opinion. it seems the only opinion that doesn't get disparaged here is 'gold bitchez'.
Nic's a trader and i respect his opinion and appreciate him sharing it with us. he's not stupid nor a fool. if you don't, think TA works and the fundamentals are broke because of PPT; then get a life, buy your gold and quit paying attention to analysts who are taking a position on stocks.
why do the Zh knuckleheads have to disparage everyone who takes a position in something other than gold? Almost all the BS artists like turd ferguson (i pick on him because i see his disparaging comments ALL THE TIME. get a life Turd!) are just out there bad mouthing someone with an opinion. it seems the only opinion that doesn't get disparaged here is 'gold bitchez'.
Nic's a trader and i respect his opinion and appreciate him sharing it with us. he's not stupid nor a fool. if you don't, think TA works and the fundamentals are broke because of PPT; then get a life, buy your gold and quit paying attention to analysts who are taking a position on stocks.
why do the Zh knuckleheads have to disparage everyone who takes a position in something other than gold? Almost all the BS artists like turd ferguson (i pick on him because i see his disparaging comments ALL THE TIME. get a life Turd!) are just out there bad mouthing someone with an opinion. it seems the only opinion that doesn't get disparaged here is 'gold bitchez'.
Nic's a trader and i respect his opinion and appreciate him sharing it with us. he's not stupid nor a fool. if you don't, think TA works and the fundamentals are broke because of PPT; then get a life, buy your gold and quit paying attention to analysts who are taking a position on stocks.
Clearly, with the S&P limit-down 30 basis points today, this is a victory for the bears.
I have the feeling Thursday will be volatile, one way or the other.
(P.S. The TSX (that's Canada, duh) made a two-year high today. 110 bp beat over the S&P today, and that's really without meaningful participation from the gold companies [+16 bp]. Go figure. http://ca.news.finance.yahoo.com/s/29092010/6/finance-tsx-drives-2-year-...)
Several foreign markets are making new 2-year highs.
But the bears are resolute, they are shorting anyway.
What is it that gets said over and over again about not fighting the fed?
-profd
Keep it coming.
Ha ha eur/usd 1.1? I dont know how old this fella is but we can be safe;y sure he will never live to see 1.1 on eur/usd.
EUR is moving to mid 1.4 in this leg up...before a correction and another wave of move to 1.6 before Q1 2011. That is confirmed from fundamentals (Willingness to implement austerity with an iron hand not caring too much for some odd protests here and there) and charts which are clearly showing a strong directional move.
Now obviosuly there will be fools like Nic who am not sure will ever be able to manage anyone money and the best he can do is write and write.
and then there is ZH who can only see Gold. You should paint this site Yellow and then distribute Gold coins. That should create some shortage of Gold and finally bring your $2000 price.
Here is a challenge. If Gold was such a preserver of wealth as some perverts believe, then hwy does Gold have these decades of price correction followed by directional moves up. It is just another commodity which is closely linked to Money supply just like any other commodity (Copper and Silver).
I could make the same argument about BernieMadoff'sFund/Gold ...kept going up (for years)...until it didn't.
Read this site on a regular basis and you will see how gold is different
http://jsmineset.com/