- September Doom Stalks Market
Matt Trivisonno
month for the stock market. Will doom strike again?
I don't think so. Right now, there is a fire-hose of money gushing at tech
stocks - a hose that was previously pointed at oil. I think it would take a
*very* serious disaster to put a stop to that, and it would have to be a new
disaster. All of the current disasters are baked into the cake: real estate,
Lebanon, Iraq, Iran. We just finished earnings season, the Fed is done raising
rates, President Bush will not bomb Iran ahead of an election, so it would
have to be something new and unexpected. There are plenty of things that can
go wrong, as always, but until that thing actually shows up, you would have to
be crazy to step in front of a market with this kind of momentum.
So, let us now asses the prophecy of the hottest name in forecasting, Charles
Nenner. Mr. Nenner appeared on CNBC about a month ago, and forecast a down-leg
for the market beginning in September and running through the end of the year,
after which he predicted a big rally in 2007. You can see this video here:
Let's concede that Mr. Nenner is indeed an excellent forecaster. I'm going to
poke some holes in his forecast, however one day when I can afford him, I will
be happy to become a client. First, a few quibbles:
1) On CNBC, Nenner thought the Fed would tighten one more time, which was
wrong according to the current consensus. Maybe he changed his mind over the
past month, but if he did, he didn't make it public as far as I can tell.
2) Nenner predicted the market would put in a low on August 8th, which it did
not. If he could *really* predict the future, we would have said on CNBC: "the
bottom is in" because the bottom was put in a couple of weeks before his
appearance.
3) Nenner said we would have a small move up to a peak at the beginning of
September. His timing and direction were excellent, but it was no small move -
it was a monster move.
I think Nenner is simply playing the odds in predicting a decline in September
and October, since that is the historical tendency. It is also the *safe* way
to forecast that period, and I would not pay him big bucks for *that*.
Now, let us consider Mr. Nenner's clients. It is safe to assume that Goldman
Sachs and Nenner's hedge-fund clients would expect to get the forecast that
they are paying for before we all got it for free on CNBC. It is also safe to
assume that they would expect a certain amount of lead time so that they could
have time to react to it - let's call it a month before Nenner's appearance,
which would make it around July 1st. Now, imagine you are one of the clients.
Your prophet has ordained a leg-down in September, and you are very pleased to
know the future, and happy to be able to sell ahead of the event. But you also
know that Nenner's other clients have the same forecast. Suddenly, a wave of
panic hits you: "I have to sell before the other clients do since they may
trigger a panic." And so you sell. And so do all the other clients, since they
have the same logical brain that you do.
The prophecy comes true, but in advance! I believe Mr. Nenner's September
down-leg already happened in July.
A true prophet could predict the future, BUT ONLY IF HE DOESN'T TELL ANYBODY!
Whenever the prophet shares his vision, people will scramble to adjust and
spoil it by making it happen too fast!
Let's also address the subject of Nenner's comment that his method cannot be
affected by *anything* that happens in the world; that Nenner's waves are
waving and nothing can stop them. I see the logic of long-term waves in things
like interest rates, however I don't think such waves can ever be used for
short-term, or even intermediate-term forecasting. One of the things that can
radically alter things is disastrous legislation like the Smoot-Hawley Tariff
Act, which probably caused the Great Depression. Another thing is war.
Remember how the stock market cascaded downward after the September 11, 2001
attack? I'm pretty sure that made a dent in the chart that wouldn't have
otherwise been there.
Yes, the bursting of the stock-market bubble would have probably painted a
chart with a similar shape without the 9/11 attack and the wars in Afghanistan
and Iraq, but I think the lows would have been quite a bit higher. (For those
of you who don't think the bubble is done fully bursting because too few years
have gone by, the 9/11 attack sped up the bursting process and that bubble is
long gone.)
And so, since Mr. Nenner's down-leg has come early, his big 2007 rally will
come early too. I think he should adjust his forecast and move up his DJIA
target of 14,580 by a few months.
Thanks for reading,
Matt
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Save The Planet, Vote REPUBLICAN......
lubow
a good time to buy stocks.
--
Lubow
NewYorker
1. I have been in the camp of waiting for the bottom between Sept-Oct and
load it up but I have second thought for quite some times since that's all
what I've been hearing Sept-Oct low. When everybody is already sold,
prediction never happens.
2. Nenner prediction of one leg down before the year might be basing on
"Election jitter". You know the market hates Democrat.
-NY
"Matt Trivisonno"
d.
change though.
BrunoR
would
expect to get the forecast that they are paying for before we all got it
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If so then a profitable strategy would be coattailing GS, and assorted
managers;
And/or just speculate respectively with puts or calls on <GS> the stock?
Personally, I'd have great respect for *Nenner and assorted gurus* that
make this
subject their business. I myself would look for either a double top
11670 or there
abouts in the Dow, or if exceeded, a move to abt. 12125. At present I
cannot
fathom a target of 14580, because if 14580, then why not 16300? Of course,
all in due time! ;-) Nevertheless, I would like to hear more what
Nenner says.
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