Tuesday, October 20, 2015

Charles Nenner: The Whole Economy is Turning Down

On the economy, Renowned analyst Charles Nenner predicts, “If you look at the business cycle, then you see the whole thing is turning down. It’s very regular. The problem is that we are not turning down from a GDP at 6%, we are turning down from a GDP of 1%. So, soon we are going to be very negative, and we are going to be in for a very negative deflationary crisis. It doesn’t mean the stock market is going to collapse now. It’s going to be the end of 2017. It’s one and a half years away. I think we could rally before the end of the year, but it will be a catastrophe in 2017. The Dow is going to 5,000 . . . by 2021. I have been saying this for years. If you are not safe before 2017, you can lose everything you have.”

Also, on the economy, Nenner warns, “It’s going to be very bad. My cycles show now unemployment is going up, which is another deflationary problem. Profits of companies will be very bad. . . . Everything is going to turn down. . . . The dollar is getting ready to go into a bear market, and next year will be the year of the Euro.”

On gold and silver, Nenner says, “I don’t think it will test the lows again, and it will take off in the first quarter of next year.”

Vulcan Materials Company (NYSE: VMC)

Vulcan Materials Company produces and sells construction aggregates, asphalt mix, and ready-mixed concrete primarily in the United States. It operates through four segments: Aggregates, Asphalt Mix, Concrete, and Calcium. The Aggregates segment offers crushed stone, sand and gravel, sand, and other aggregates, as well as related products and services. The Asphalt Mix segment offers asphalt mix in Arizona, California, and Texas. The Concrete segment produces and sells ready-mixed concrete in Georgia, Maryland, New Mexico, Texas, Virginia, Washington D.C., and the Bahamas. The Calcium segment mines, produces, and sells calcium products for the animal feed, paint, plastics, water treatment, and joint compound industries.
Take a look at the 2-year chart of Vulcan (NYSE: VMC) below with my added notations:
2-year chart of Vulcan (NYSE: VMC)
Over the past 3 months VMC has created a key level of support (red) at $85. That line is also the “neckline” for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (blue). Confirmation of the H&S would occur if VMC breaks the support, and lower prices would be expected from there.

The Tale of the Tape: VMC has formed a head & shoulders pattern. A long trade could be made at $85 with a stop placed below that level, but ideally, the pattern implies a short trade to be entered on a break below that level instead.

Honeywell $HON Stock Breaking Down From 4-Year Bull Market

Honeywell International Inc. (HON) — This is the world’s largest manufacturer of electronic systems used on aircraft, small jet engines and climate control equipment. Honeywell also makes industrial materials and automotive products.

On Friday, the company reported third-quarter earnings of $1.60 per share, up from $1.47 a year ago and beating the consensus estimate of $1.55. But revenue of $9.61 billion fell from $10.11 billion last year and missed estimates of $9.85 billion.

For the full year, S&P Capital IQ Equity Research forecasts revenue will decline 3% based in part on weak U.S. defense sales and currency headwinds. Its analysts also note additional weakness in the global economy could negatively impact the stock.

On Aug. 21, HON stock broke down from a bull market that had lasted more than four years. As with many stocks, the Aug. 24 low appeared to be a short-term low and perhaps even a bottom.
However, on a rebound, HON stock failed to successfully challenge its 200-day moving average, falling below $92. A subsequent rally failed again to successfully challenge the 200-day moving average at $102.

HON stock closed 1.5% lower on very high volume following Friday’s earnings announcement. The current pattern is that of a bearish “horn.”Traders should sell HON stock short at $99 with a target of $85 for a potential gain of 14%. A stop-loss order should be entered at $104.

If you hold shares short through Honeywell’s ex-dividend date, expected in mid-November, you will be required to pay the dividend to the owner of the stock. The company pays a quarterly dividend of 51 cents per share for a current forward annual yield of 2.1%. Also, check with your broker for any unusual restrictions on shorting this or any other stock.