Market Outlook: 3 Bears that Don't Hibernate

Confused about the market? Caught short this summer? Confused when to lock in recent gains after seeing your IRA get cut in half? Why not follow the big boys who were right both on the way down and back up?

Charles Nenner, former Goldman Sachs market timing analyst, uses cycles, technical analysis, and a macro approach to time myriad markets. He called for a 2007 market top at around Dow 14,300. In 2008, he warned of a 30%+ decline in equities and in February of this year, he called for a large rally to take us to S&P 1000.

Robert Prechter, founder of Elliott Wave International, uses Elliott Wave Principles, cycle theory, and investor sentiment to gauge market turning points. In the summer of 2007, less than three months before the all-time stock market top, Prechter issued a short recommendation and didn’t cover until February 23 of this year, days before the March lows, as he predicted a large bear bounce to S&P 950ish.

Bob Janjuah, RBS chief credit strategist, issued a “stock crash alert” in June of last year, predicting a market crash and credit event in September 2008. He then predicted a large “relief rally” early this summer.

So what do all these people have in common? Besides their past predictions?

Their current predictions.

Charles Nenner believes we have topped out and will be retesting lows. Prechter prognosticates a market top in August, beginning the next wave down of this bear market that he believes will cause the S&P to end up below 400. Janjuah predicts a sharp move down starting late August, possibly culminating in an S&P under 600.

Called the massive equities decline in 2008? Check.
Called the bear bounce in spring-summer 2009? Check.
Calling for another massive move down this fall? Check.

I called July 4 of last year the top of crude oil, May 20 a short trigger in equities, September 15 a crash trigger, and January 5 of this year a short trigger. I called for a bounce at Dow 6500, expecting a large sell off in mid-late April to continue the decline. I missed most of this rally, besides a few long positions here and there, so I don’t have the track record as the bears above. But their analysis corroborates mine. I called early August around 1015 to be the top. We will see how that plays out.

Comments

[Tony Petroski:]

Naufal. God love you. If you want to be taken serious, get a Yankees hat.

Aug 17 08:54 AM

[Rookie_SA:]

I am short this market .. But the options expiration this week makes things interesting ..

Aug 17 08:57 AM

[TucsonSpike:]

I am short this market also, my technical indicators showed a shift from Greed to Fear. It always amazes me how many different analysis tools reach similar conclusions.

Aug 17 11:54 AM

[Graham and ...:]

Count us as the fourth bear that doesn't hibernate. Yes, we're "bullish," but only in comparison to Prechter. And we've been (and continue to be) bearish for some time.

www.thestreet.com/p/rm...

Aug 17 12:34 PM

[optionsgirl:]

Prechter doesn't impress me, market movement does. August 18th is options expiration. I just hope the market has a real good climb directly after options expiration, so that I can generate some cash by selling calls on core dividend producing positions. I might buy some puts at the same time, to create safety nets with straddles.

Aug 17 12:49 PM

[justin_3d:]

Yeah I am with you in this short the market! For me it has been that i thought the market had broken the 38.2% Fibonacci level , only to see it come down and close below it! It has not been able to brake this level!

Unlike some of the bears that made a great call, I was short till 7400! I got out there, bought some DIA, and had a whopping return in 3 days, where market rally to 8600 and got the hell out! After that I just been quiet in the market, but this retracement of the market has really interest me a lot, to start initiating short positions on the SPY!

Aug 17 02:49 PM

[pslater:]

Well done Naufal. I understand the Fibonacci retracement and the MA's. What is the sloped straight line indicator?

Aug 17 05:22 PM

[justin_3d:]

I think that's a Channel regression! Is great, but there is too many indicators! For me the Fibonacci level is good enough!
Although i would not mind getting to know more about that indicator. How do you draw it and how do you read it?

On Aug 17 05:22 PM pslater wrote:

> Well done Naufal. I understand the Fibonacci retracement and the
> MA's. What is the sloped straight line indicator?

Aug 17 08:56 PM

[pslater:]

justin_3d, I think you're right but this appears to be different for most channel regressions in that the tops (Oct 2007 and May 2008) seem to be what the data is drawn off rather than a traditional 'least squares' regression.

I am impressed how this indicator called the bottoms in March and July this year. The fact that a Fibonacci retracement and the regression channel intersect at recent prices will probably not prove to be insignificant.

Aug 19 02:34 PM