Tom DeMark Charting a 1929 Style Collapse
Famed market timer of the hedge fund stars, Tom DeMark, founder and CEO of DeMark Analytics, LLC, sees the next few days as critical to the survival of the bull market in an interview on CNBC today. DeMark’s chart showing the correlation between today’s S&P 500 versus the Dow Jones Industrial Average in 1929 has been making the rounds and is indeed uncannily eery.
On October 9th, 2013, DeMark said he forecasted a rally of 12.6% to coincide with the rally that occurred one month before the peak in 1929; which also happened to be exactly 12.6%. DeMark said we are currently at the inflection point, similar to 1929, where the stock market unraveled and added, “we think the next two to three days are extremely critical.”
DeMark said if today was an up close and tomorrow the market closes down, followed by a lower opening the next day, “we are probably going to unravel quickly.” DeMark explained further if the market closes down today and opens lower tomorrow, then the market will also unravel and any news on Friday will be perceived as negative.
The interview continued with Demark commenting on the importance of the sequence of days which happens to be 23 and the potential downside which he sees as 40% off the high, or 1,100 on the S&P 500.