Thinking about testing the waters of a badly beaten stock market?
Think again. That's what the proprietary research of Professor Charles Nenner shows. This former Goldman Sachs technician uses more than 200 indicators to analyze trends and cycles and has come to stark conclusion.
"My system is very bearish," Nenner tells Breakout via telephone from Amsterdam.
"I think 1139 (in the S&P 500) is going to hold," he says, but he wouldn't buy any bounce because his work shows this cycle continuing into October. "My systems are showing a lot of risk. We are totally out of the market after reaching our upside price target about 200 points higher."
So, as much as you might be tempted to call the bottom in this slump, Nenner flatly says there's no reason why you should be long stocks. And even though 0.25% for a 2-year Treasury might seem uninspiring, Nenner says making no money in bonds is not a reason to try to make money in stocks.
Curiously, his system has also spit out a couple of ''special cases" where particular stocks have fallen so far that they are now below what he once considered "unrealistic" downside price targets, and thus, have become buys. Specifically, he says Research in Motion (RIMM) at $22 and Best Buy (BBY) at $25 are worthy of "small positions" unless and until they go below his price targets, then he will sell them. (As today's trading continues, Best Buy is approaching that target but RIM is hanging on by a thread)
There is one contradictory indicator that he is currently struggling with because it has a 90% batting average over the past 100 years. Nenner says at this phase of the presidential election cycle, when the first 5 days of January PLUS the whole month of January are positive, "90% of the time the market ends up for the year."
"That's a statistic that I cannot disregard" he says. And as strong as that is, it's still not enough to get Nenner into the game or change his overall macro concerns. "It's gonna be very difficult to make money."
And that's something all of us can probably agree on at the moment.
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- Professor Charles Nenner
- Research in Motion
- stock market
- Goldman Sachs technician
- batting average