The stock market has been charging along for months. Perhaps not for much longer. Tom DeMark, an award-winning technical analyst who has advised investors such as Paul Tudor Jones, Leon Cooperman, and Steven A. Cohen, believes a market top is imminent.
DeMark highlights that the Dow Jones Industrial Average, from its December 1914 low to its September 1929 high, rallied 624%. From the 2009 low to this week’s high, the Dow has gained 587%. He notes that the current price action mirrors the patterns from the earlier period.
DeMark highlights that the Dow Jones Industrial Average, from its December 1914 low to its September 1929 high, rallied 624%. From the 2009 low to this week’s high, the Dow has gained 587%. He notes that the current price action mirrors the patterns from the earlier period.
DeMark focuses on trend exhaustion, with the guiding principle that "markets top on good news and bottom on bad." He uses sequences of 9 and 13 daily, weekly, or monthly bars, which need not be consecutive but must exceed the performance from 4 sessions ago in the 9-model or 2 sessions ago in the 13-model. For more information on DeMark's Sequential 9-13 Setup, visit his website [HERE], and [HERE].
DJIA (1913-1933, and 2008-current; monthly bars).
"On the daily charts of the Dow and S&P, two new all-time highs are needed to trigger a sell signal."
DeMark suggests the Dow’s optimistic upside potential is 47,045, and for the S&P 500, it is 6,118."This could lead to a 5% to 10% pullback or a full breakdown."
DJIA (2019-2024; monthly bars).
He also compares the current rally to the one from 2020 to early 2022. The multi-month advance from late 2022 shows a potential upside projection identical to that earlier move.
DJIA (Q4 2024; daily bars).
For the S&P 500, DeMark reports that the monthly sequential model countdown is at 12 or 13, with an upside potential of 6,118. The S&P 500 closed Thursday, November 14, at 5,949, unable to maintain gains above the 6,000 mark.
On the daily charts, both the Dow and S&P are at sequential countdown 11, meaning two new all-time highs are needed to trigger a sell signal. This could lead to a 5% to 10% pullback or a full breakdown. "The past two weeks' rally has been precarious. A sudden halt in buying—without selling pressure—could undermine the rally and shift the market into a sellers’ phase."
"While good news may last until Trump's inauguration, once buying interest fades, any subsequent rallies are likely to be short-lived."
Nvidia (February-November 2024; daily bars).
"A new closing high would mark the end of its rally."
DeMark is also cautious about Nvidia, the key microchip maker driving the AI revolution, which reports results next week. The stock is at countdown 12, and a new closing high would mark the end of its rally. DeMark projects Nvidia’s upside potential at $154.50 but warns the downside risk "could be significant."
See also:
Lars von Thienen (November 1, 2024) - The 41-Month Kitchin Cycle Topping Patterns in US Stocks.
Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.
Sergey Tarassov (September 8, 2024) - Kitchin Cycle Suggests DJIA Decline Until End of 2025.
Lars von Thienen (November 1, 2024) - The 41-Month Kitchin Cycle Topping Patterns in US Stocks.
Richard Smith (October 29, 2024) - Equities Endgame? Spectrum Cycle Analysis of US Indices.
Sergey Tarassov (September 8, 2024) - Kitchin Cycle Suggests DJIA Decline Until End of 2025.
Trends and turning points are more important than levels. 60-, 80-, or 120-Year Cycle?