Take Chips Off the Table, Market Catastrophe Brewing: Pro
Assistant News Editor, CNBC.com
Bonds, equities and the pound are heading towards a "catastrophe", according to technical analysis by Charles Nenner, founder and head of research of the Charles Nenner Research Center which focuses on the cycle analysis of markets.
Sterling has been one of the worst performers of 2013, falling almost 7 percent against the dollar this year and dropping below its key support level of 1.50 against the dollar last Friday on worse-than-expected manufacturing data from the U.K.
(Read More: Pound Tumbles as UK Heads for Further QE)
Nenner told CNBC the pound's decline would continue into the summer, according to his analysis of the pound/dollar cycle.
"We've hit 1.50 and if we get close to 1.49 then we'll go to 1.44 and if we get to that point before July, it could go even lower," he told CNBC's "European Closing Bell."
"Austerity is not going to work in Britain and knowledgeable people know when something fishy is going on. I do my research and when the cycle is going down, so does the cable (the GBP/USD pairing) and you have to wait for the cycle to bottom - there's nothing else you can do," he said.
Even if the Bank of England introduces further quantitative easing (QE) when it meets to decide on monetary policy on Thursday, it would not support the currency, he remarked.
Nenner, who uses an algorithm which factors in multiple cycle movements in global markets, said that long-term data showed that European equities, bond markets and commodities such as gold, which has fallen 6 percent since the start of the year, would also see a downward trend.
(Read More: Can Gold Stocks Regain Their Luster?)
"You should take chips off the table," Nenner said, have rallied this year, predicting that the Stoxx Europe 600, up over 4 percent in 2013, would decline. "The insiders were buying [in 2012] and now the insiders are selling," he said.
"I've been warning about the bond market also, there's going to be a catastrophe soon. And Gold, people tried to buy in every dip which was too early and you have to get used to [the fact] that sometimes the situation is dangerous and you cannot make the profit. Try to keep the money you have for better times," he added.
In fact, Nenner warned that there were hardly "any bright spots" in asset markets, until 2018.
(Read More: Market Music Has Stopped, I'm Getting Out: Gartman)
"We're in an inflationary period and it's very difficult to make money. I still have a target of 5,000 for the Dow that we should reach in 2017 or 2018, and then we'll get a huge bull market so it's best just to go to sleep with your money until then," he said. "People should be asking, 'How much can I lose?' rather than 'How much can I make?'"