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Technical Analyst Charles Nenner Predicts the Market May Crash in April
After much pleading and cajoling I managed to get a no-holds-barred, no stone unturned, 40 minute interview with technical analyst to the stars, Charles Nenner of Charles Nenner research in Amsterdam, for Hedge Fund Radio. Bottom line: A second deflationary tidal wave may hit the US as early as April. The Dow could crash, possibly heading for a double bottom at 6,000, and bonds could go up for the rest of the year. Oh, and by the way, crude oil futures are discounting way with Iran by 2013!
Once this deflationary scare burns out, the greatest trade of your lifetime will set up, says Charles. This is the one where you pile on the leverage, take out a home equity loan to get a still bigger position, and max out your credit card to cover your living expenses. Get it right and you’ll never work another day again, you can pay off your home mortgage, and get a building named after you at that college you can’t stand. The bad news? This trend could start tomorrow, or in two years. Blow your entry point, and you’ll get wiped out.
Since Charles has had a particularly hot hand lately, calling the top in the US stock market within four days, months in advance (click here for my December 12 interview with Charles at http://www.madhedgefundtrader.biz/Charles_Nenner.html ), he has major hedge funds relentlessly banging on his door for his next call. I managed to track him down late last night at his home in Amsterdam, where I extracted an update on his global view.
Charles is talking about shorting the 30 year Treasury bond, a trade I’ve been yammering on about for the last several months, and seems to be on the verge of breaking a 29 year bull market trend line. The yield on this paper, now at 4.55%, will gyrate between 4.25% and 5.07% for the next year. Then sometime in 2011 we will break out to 7.5%, possibly very quickly. That would take the bond futures from 119 today to as low as 82.
But that’s just the opening act. Once inflationary fears take hold, the 30 year yield could fly as high as the November, 1981 high of 13%, bringing the futures down to 53. The Armageddon scenarios you hear about today could take it lower still. And this is all in a contract with a margin requirement of only $3,240 for a $100,000 position, giving you 30:1 leverage. No wonder the big hedgies are salivating.
Keeping this interest rate scenario in mind, I then pinned the erudite Dutchman down to calls on every other major market. The S&P 500 may grind back up as high as 1145, and then the next big move is down. The dollar is over extended here, but he sees it eventually moving to $1.18 against the Euro. The yen is ready for a big move down after peaking around here, initially targeting ¥105. Traders should take profits in the Ausie/Euro cross at 68 by May. Crude will peak in the low eighties by the end of March, and then begin a one year decline. Copper could also peak then at $3.73. Gold has peaked already, with Charles bailing on his longs at $1,220/ounce, and we are now in a downtrend that will last for some time, until the above mentioned inflation fears kick in and take it to new highs. Natural Gas looks terrible, having just peaked at $6/MCF. It’s headed downtown, first to $3.80 and then to $1.70. Gulp!
What is the one trade that Charles would put on today? Go long the Ausie/Yen cross, where you go long the Australian dollar and short equal value of Japanese yen at today’ price of $AUS 0.80. Charles’ calls were so hot, my hand was sizzling when I finally put the handset down.
Charles has a long career that includes stints at medical school, Merrill Lynch, Rabobank, and 12 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 two years, and found them to be uncannily accurate. Today, Charles Nenner counts major hedge funds, banks, brokerage houses, and individuals among his clients. You can find out more about Charles’ work at his website at www.charlesnenner.com.
To catch my entire sizzling interview with Charles Nenner, please go to www.madhedgefundtrader.com/ and click on the “Today’s Radio Show” menu tab on the left. This will no doubt be the hottest show of the year.
For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily.
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"The S&P may grind as high as 1145"
Thats the funniest thing I have read in months.
well everyone has beern talking about a second downleg since last march
but so far its keeps going up
basically noone knows and it does what the computers at goldman sucks want it to d
o
Master Bates and all other young men and women out there, having raised four kids this is my advice to you:
1. Education is important but remember colleges are businesses, if you want to get really well educated read everythiing you can don't wait to sit in a classroom. Learn a second and third language. In the U.S - Spanish a must.
2. Get a skill that is in demand and requires intelligence to get into. The uneducated/less intelligent part of the world is going to continue to get slaughtered (jobs and $) over the next 100 years.
3. Start your own business. Do not work for a corporation for anymore than a few years if that. You see who runs these public companies, crooks and theives are in the majority, don't make them money make it for yourself.
4. Keep a positive attitude always.
5. Don't trust anyone, competition is fierce everywhere.
6. Along with (5) keep your thoughts to yourself.
7. Must read book - The Future of Capitalism by Lester Thurow
8. Stay healthy, watch the addictions and good luck!
Gimp ... You should get paid for this advice ... I'm going to relay to all my kids ... or to all my kids who are not employed by the Government (2) ... or the Union (1)
Well that leaves one, he'll get your advice since he's unemployed.
It is great advice, thanks.
distance to the maturity wall is relative, and congress has been wh----ng out america in front of that wall for 35 years. the nation states are locked together heading for the cliff, each trying to push the others in front. and the healthcare / university slush fund is the latest attempt to redefine the perception.
Obama was correct, the bill is to determine if congress can still deliver, for the cartels. once the supreme court shorted the constitution, the congress and us presidents went to work for the cartel gate directly; they pledge to protect the constitution.
democracy never rested on the will of a handfull of sycophants in robes. it will continue on regardless of who is on that train when it leaves the station.
Bah Hum Bug. This sunds like a Orson Welles movie. Kevin, I'm sure each administration, and every member of government for that matter, has an adgenda. But to be working for the God Father somewhere? Maybe in Columbia, but not here. Give me a break.
and weapons of mass destruction is the reason that iraqi oil is not flooding the market.
There will be no market crash come April. Fed just delivered a message to the markets: KEEP BUYING RISK ASSETS FOR AN "EXTENDED PERIOD". Plenty of liquidity to prop up shares but focus on these key sectors going forward: energy, commodities, agriculture, alternative energy (especially solars), biotech, medical devices, tech (software, semis, networking), health care (health insurance), infrastructure.
And your going to follow the Fed? I just can't do that Leo. I think you would be foolish at this point not to either have a large cash position. Leo, the bad assets (bad debt) levels in the US are horrific. Debt is not and never will be a means to wealth building and sound economies. I don't care if its sovereign debt or consumer debt.
Leo, it got out of hand this time. The only reason we didn't reverse in the early 2000's after the Tech bust is because that was a "cash" crash not a debt crash. The pain was severe and short lived as a result of this and the assets cleared at their correct market price. It's different this time Leo.
The crap that caused this is still basically in the system and it's going to act as a drag on our economy until it is allowed to clear. Which I actually think will occur within 1 year from today. The reason I think this is that the banks will not be able to avoid writing down this next big wave of real estate losses. Real estate led us into this hell hole and housing will lead us out of this hell hole.
Main street has and is still paying the price for their role in this, but the banks have not yet paid theirs. They can run but they can't hide from bad debt. Someone at sometime has to take a loss to the full extent of the loss.
If not, then we will be debating this same topic 20 years from now. I pray that that isn't the case. I don't want the market to crash I just want the assets to be recognized at the current market value. Now if the market doesn't like this, then so be it. My cash position will prove to be a valuable position.
I agree with most of your reply to Leo but to believe that it will be cleared in 2011, not so much. The regionals will get destroyed this year but the TBTF's will make Lehman/Enron accounting look like child's play--specifically JPM, WFC, and BAC. They will not own up to their derivatives problems a year from now--it's gonna take a bit longer--when they implode in 2012. Just my opinion.
He's probably right on Gold in the near term...
ASSUMING the paper markets hold together and the
rumors stay just rumors. If we see a breakdown
$2000 would be conservative then.
LOL just another jackass moonshooter. Leverage IS the bubble. I'm sure it'll be simply orgasmic to sit back and watch that perfectly timed screaming-leverage trade pile up zillions of dollars worth of digital Black Swan Booty in your FX Amerischwab account, but how the fuck are you going to withdraw it?
leo why are you here
"Gold has peaked already, with Charles bailing on his longs at $1,220/ounce, and we are now in a downtrend that will last for some time, until the above mentioned inflation fears kick in and take it to new highs." Earlier stated, "The bad news? This trend could start tomorrow, or in two years." So gold could continue to go down for the next 24 hours, or two years? Hmmm.
Charles is Major League wrong on the Gold, IMO. We're in for a fierce spike towards $2000.00, then to $4000.00 as panic roils markets and USD collapse from all this chest pounding w/China. The US will again be loathed by major influential countries around the world and it will be diminished through financial warfare.
"without much inflation".... you are quoting gov't CPI... try looking to Shadowstats for the true numbers, then reformulate your statement.
The stock markets low voume computer ramping has done nothing to incite confidence in investors.
In truth, the only real buying (covering) has been the covering done by ETF funds that are short (daily ETF's like Direxion funds must cover each day). These funds, with their leverage (often up to 4X) are being used by the market as proxy buyers to "ramp up the market". Thus, the end of day buying sprees (attributed to the PPT).
IN truth, the PPT is simply a ponzi scheme on steroids that was put into place by the streets introduction of leveraged ETF's (that feed the into the buying by purchasing on the long side, and covering by the short side). Notice the multiple leveraged ETF's introduced by the ex- Goldmanites since 2008. There is no market. There is simply illusion. It is a game of 3 card monte'...........a magic trick. A trick financed and paid for by the feeding of the leveraged ETF's.
the last hour of the day is always interesting because the leveraged etfs close for trading a half hour before the market closes. is the vampire squid front running the order flow in these things?
bingo.
direxion's largest counterparty = squid
proshare's largest counterparty = mr. morgan's ghost
That is a very interesting and valid point.
nenner nenner nenner.....
always an entertaining crystal ball
yep leo 21% unemployment is normal ,, no projections ,, suck it in,,
And don't forget to buy SOLAR BITCHES!!!!
No, wait.. that's just stupid...because of two important little words....
NATURAL GAS BITCHES!!!
see Bloom Energy et al. Much more cost effective and will serve us well during our looooong transition towards solar.
Even the worst projections do not have unemployment that high, but granted the unofficial rate is still too damn high (close to 17%). The problem is that the policians have yet to figure out that the US needs to implement a jobs program that works, focusing on new and old industries like alternative energy, biotech, healthcare, infrastructure, etc. These guys need to get their heads out of their arses and start taking decisions for the good of the country. They truly are pathetic!
A government jobs program is your answer? Yeah that's all we need, more government malinvestment and then we'll get right back on track.
government can not create perminate productive jobs ... by creating more debt .
grab a good Austrian text book.. i recommend recommend reismans Capitalism..
every one wants to make up new rules
leo .. williams shadow statistics .. flags it at21%
of course when you count all the unemployed lol
Yes. Stop focusing on health care that nobody gives a shit about, and get to the real problems.
(although we do need to reform health care, you have to stop the bleeding before you can work on preventing injury NEXT time.)
Ladies and gents,
Please, please, PLEASE, try not to project your personal situation onto the real economy. You lost you job, your buddies have lost their job, you work with small to mid sized companies that are getting hammered. I understand, it's tough, but this is normal given the excesses the US economy has lived through in the last decade. Other economies that never experienced these excesses, like here in Canada, didn't get hit as hard. We got our own problems formenting, including a housing bubble in some hot areas, but by and large, we pulled through fine - so far.
The way the US economy works is simple. Big banks and big corporations who have access to the bond market make the money first, then it slowly spreads to other sectors of the economy. Be patient and don't expect miracles during this recovery.
Leo, we are running on a skeleton crew across the country
As to projecting my personal situation, and that of my friends into the economy...
WE ARE the economy. What is hard to understand about that?
I'm not trying to be disrespectful, so please don't take it that way.
What I am saying though, is that I could give a shit less if big banks and big corporations are making money if myself and 30-40% of my friends are really having trouble trying to scrape by. Until the economy gets to us, there is no recovery in my eyes.
WE are the economy. Not the 1% of CEO's that are making money now by screwing us over. There are a lot more of us than them.
Just to reiterate my point:
WE ARE the economy.
agreement on we are the economy.
"WE ARE the economy"
I don't know who junked you, but our generation is the one receiving the shaft CURRENTLY, and we will be forced to live under the yoke of austerity as a result of the profligate consumption expressed by those that came (and ate everything in sight) before us. When I speak with my peers, the anger is palpable. What does a large group of bright, struggling, disillusioned youth do when given idle time and a paucity of resources? I think history has that debate locked away. Hell, if I were BO (and I don't endorse 99% of the man's handlers' policies,) I'd funnel money into promoting the hiring of college grads, if only to keep the educated younger generation tied up and occupied. When we have nothing but time on our hands and brains in our heads, trouble is usually forthcoming.
I agree with you about the anger in my generation, but most of the people I know are too tied up in American Idol or in their own personal situations to give any thought to the larger problems in society. Some of us are angry, but others are too stupid to realize the real problems facing this nation. Of course, you and I seem to understand and that's why we're here.
But a lot of other people our age are still either watching American Idol, "I got SO drunk bro", or other frivolous things.
I think that there needs to be more outrage before anything can get much better, and I think that our generation needs to take the bull by the horns and actually do something.
As to the previous generations eating everything up - they ought to be ashamed of themselves! Bastards... and they did it with our money too!
The US government cannot afford a 13% coupon.
PERIOD.
If we were to have to roll debt at those rates, we are immediately FINISHED. Anyone wanting to "trade" gold in that case is a complete effing fool. Anyone levering up will be CRUSHED. There ISN'T THE INCOME in this economy to service those types of rates.
We left the realm of "real" interest rates a long time ago...look around the US...do you see any economic activity here that can generate 13% yields? Business here just isn't that profitable anymore. Yields are going to remain low as a function of the declining profitability of the US. There's no fucking oil to drill to make 13% RoR. There's no metals to mine for 13% RoR. Face facts, we are DEPLETED and hollowed-out. Hell, you cannot run a factory at 13% RoR...look down the mature industrial businesses on the SP500 if you don't believe me...look at their yields or return on capital. JFC, it's right there in print. Nobody is doing business in the US because it's NOT THAT PROFITABLE. Fuck, we passed peak oil here nearly 40 years ago. All mining, extraction, production metrics are in decline for basically everything.
People DO NOT understand what yields are! Yields are NOT a measure of risk! They are a measure of the supply and demand for credit! There are willing lenders like the Fed but NO willing buyers of credit except the USG. This is why yields are low here and high in Brazil. Developing countries have higher interest rates because there is significantly more demand for credit because entrepreneurs can use that credit to turn around and make profits well in excess of the interest rate.
People have to get their heads around the money we have as being a supply/demand instrument, NOT a store of value or other denominator.
This is one of the most astute comments I've seen on ZH. Since the late 90's my friends and I have though about what business we would start, if we had no impediments. The answer is "nothing". Every business is in huge overcapacity and margins are near zero. That is what zero interest rates means, and it is why we have hit the wall.
Halle-fucking-lujah! Someone gets it (Trav7777).
I'm not saying that it's necessarily prudent, but we can afford whatever we have to as long we have printing presses.
I don't think that coupons will get to 13%, because we're better inflating our way out of it at that point, and will not sell bonds.
Really, and how do we afford imported oil if we run the printing presses? How do we afford COLA's to Social Security and Medicare if we run the printing presses. One of the great fallacies perpetuated by financial media and blogs is that we can print our way out of our debt situation. Nope. Too many things, oil is a great example, will adjust in price at a greater rate than the rate we debase our currency. There is no free ride from inflation.
We would afford the health care and social security because those are priced in dollars as it is.
As far as the oil, you have a point. Still, it wouldn't appreciate by GREATER than the rate of the currency debasement. It would appreciate at the SAME rate we depreciate the currency.
But that's just another reason to get off of the oil.
Nope, because the Saudis would price oil based not only on the current rate of US$ debasement but they would also build in a premium to account for potential increases in debasement in the future.
"Proprietary Cycle Analysis System" sounds like the last two inches of my large intestine.
Pass the ink and the paper leaflets.
a big lol ... TA is so reliable that's WHY THE BIG GUYS FRONT RUN
Every one and The barkin dog use the TA .. of Their choice ..
some one gets It right because Elliott wave yadda TA .. are all saying different results
then its paste A GOLD Star.. ON thee Foreheads .. until next time
depends upon whos TA,,
not a clue on gold how much of then move from 260 to 1120 did you miss,, silver 4,,, to 17. hui index 35 to 410,
its a asset with no cointer claim..
simclairs got a million bet go get some of that loot ,lol
as for predicting ,, on a scale of 1 to 10... a minus 3,,,
The equity uptrend since March 2009 was a bear market rally contained within a much larger downtrend that started in 2000.
Weekly index charts have been giving bearish warnings for months now.
The proprietary indicators I use in my technical analysis can identify trend changes before they occur.
In early 2007 I warned of an impending stockmarket crash.
I confirmed an equity bottom by early April 2009.
From mid 2009 onwards I warned of an impending USD rally and it's got much further to go.
http://www.zerohedge.com/forum/market-outlook-0
I call bullshit. For one thing, the weekly chart is a flat line since about 1998. For another, since your current "call" is months old -- it is WRONG! Eventually we will have a corrrection or bear market. You don't get to say you called it 2 years earlier. That is what we call a stopped clock.
I hate assholes who are spamming for their "proprietary" indicators. Fuck off!
All it will take is one more financial scandal and this market hits 6000 overnight. The markets are held together with chewing gum, duct tape, and a false belief things have gotten better and the worst is behind us. One current firm is shown to be cooking their books past the mark to market scam and it is over fast.
Repo 105 exposed the huge fraud going on, and it seems to have had zero effect on the market. The market seems immune from scandal, fraud, fundamental economics, etc... There is a total disconnect from fundamentals and reality. The only guiding mantra is "the trend is your friend".
Don't give up your day job to do stand-up.
Deflation, Dow 6,000, and double digit interest rates???? Forget it. We may well get a hyper-inflationary situation down the road that could give us this scenario (absent deflation, of course) but it ain't gonna happen any time soon..... and when it does, gold will be well north of $2,000.