The Three Bears Who Forecast the Goldilocks Stock Market

By: Anthony_Cherniawski

Stock-Markets
Best Financial Markets Analysis ArticleCharles 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 summer 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.

Margin Call in Shanghai.
Bank of China to speculators: “You’ve had enough.”

The VIX may be ready for its breakout.
--After Friday’s Consumer Price Index was reported, the markets sold off, only to do a partial recovery on Friday afternoon. From an Elliott Wave perspective, the decline in the VIX was a wave c of an a-b-c correction. Even though it is below Critical Support at 25.60, the reversal pattern now appears complete. A rally above Critical Support should break out of the wedge.




















After surging by 90.7% since the beginning of the year and notching up seven straight weeks of gains, the Chinese Shanghai Composite Index has now declined by 12.2% since its peak of August 4, taking the Index back to its early-July level. On Friday, the Index (3,047) dropped to below its 50-day moving average (3,103), but it is still comfortably trading above its 200-day line (2,420). The Rate-of-Change Indicator (black line in the bottom section of the chart) has broken below the zero line, thereby flashing a sell signal.



















The NDX consolidation may be over.
--The NDX reached a new high on Thursday. Friday’s activity shows a clear reversal pattern and appears ready to resume its decline. Critical Support at 1612 is the level below which things become more bearish in the NDX. The next target is below 1395, which is the July low.