(Note: This article ran yesterday -Feb. 5th- in Business Insider, so if this comes to pass, we are looking at the 7th and 8th.)
Noted market-timer Tom DeMark did not sound optimistic about the prospects for stocks in an interview with CNBC this morning.
DeMark compared today’s market to that preceding the Black Friday crash in 1929.
“When the market made its high on September 3, , there were 23 subsequent trading days where the Dow Jones Industrial Average had a short-term bottom,” he said.
“23 days aligns with the low end on Monday. And subsequent to that, we had a four-day rally, and then the market unraveled — went down 48%. We are currently at that inflection point. Like I said, so far, everything is aligned. We think the next two to three days are extremely critical.”
DeMark explained why:
We get into the minutia as well as the long-term, and what it looks like to us — if we were to, yeah, just for as an example — if today were to be an up close, versus the prior day’s close, and then tomorrow, we close down, and we follow with a lower opening the next day, and trade a little weaker, we’re probably going to unravel quickly.
Now, yesterday, we did have an up close on most of the major U.S. indices. So, if we get a down close today, and tomorrow we open lower and trade lower, we’re probably going to unravel, and the news, regardless of what it is on Friday, will be negative — perceived negative.
What we’re seeing right now, if the market does unravel, I think we’ll have a correction of 40% off the high, which would put us at about 1100 [on the S&P 500 index].
We should note that DeMark has been looking for a top in the stock market for a while.