Friday, April 19, 2013

Stock Market Crash Prediction (Another One)

We’ve heard from Charles Nenner before.  Here’s the latest.

“…Charles Nenner, founder of the Charles Nenner Research Center…thinks the sell-off has only just begun…Expectations that the macro picture will improve were a bullish catalyst in 2009. Now it's time to sell the news…Nenner says his firm took off all of its equity exposure when the S&P was at 1,510 specifically so they "wouldn't have to deal with all this mess…Any market close more than a couple points below 1,544 on the S&P 500 would be an indication to him the market is ready to roll over in a big way…"  Full story and video at…

"IBM's poor earnings performance in the first quarter likely foretells a rough time ahead for the stock market.  In an after-the-bell report Thursday, the information technology leader missed narrowly on bottom-line profit but widely on top-line revenue…As a result, traders punished IBM in early Friday action, sending shares down 6 percent, corresponding almost perfectly with the revenue disappointment.”  Full story at…
...And Apple is below 400. It wasn't all that long ago that Apple was trading at 700.

"The Fed’s monetary policies have made it more difficult for banks to generate revenue, forcing them to seek profits in other ways...“It’s very difficult to make a loan of a multi-year duration because you have this very low interest rate on your balance sheet,” Bair explains. “That’s not good for business lending. Banks can make money in other ways – trading profits, investment banking fees, deposit accounts –other ways…that don’t necessarily help the economy.”

"Business lending, not home refinancing, holds the key to the economic recovery...“Our economic policies are too much aligned with trying to revitalize the economy we had pre-2007...” – Sheila Bair
Story at...

Friday, the S&P 500 was up 0.9% to 1555 (rounded). VIX fell about 15% to 14.97.

The S&P 500 made a lower-low yesterday (Thursday), with about 8% lower volume than the prior low on the day before.  Breadth improved with about twice as many stocks advancing.  New-high/new-low spread improved too.  This isn’t an all-clear for the correction, but it probably does mean that the market will reverse up.  I should have checked this yesterday – it always looks better to predict the future rather than predict the past.   Today was up on pretty good volume and I expect the market to go up until we again flush out the shorts.  That will probably be signaled by a big move up…say greater than 1% up.   As a wild guess – and that’s all it is – perhaps the S&P 500 will get up to 1580 before it reverses.  Who knows?  It could go back and test the top again at 1593. 

Friday, the NTSM analysis was HOLD at the close.  Only PRICE and SENTIMENT indicators are negative. VOLUME and VIX are neutral. 

I remain about 20% invested in stocks as of 5 March (S&P 500 -1540).  My reasoning may be found at…
…but now I have confirmation from the NTSM analysis which sold at 1575 on 16 April.  (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!)

I have no problems leaving 20% or 30% invested.  If the market is cut in half (worst case) I’d only lose 10%-15% of my investments.  It also hedges the bet if I am wrong since I will have some invested if the market goes up.  No system is perfect.