This is the week where DeMark’s main indicator is put to the test. There are exhaustion points all across different time frames and different markets. The four hour time frame for the DeMark TD Sequential on the S&P 500 (SPX) has demonstrated accuracy since the lows back in June 2012. Whenever a TD Setup or TD Countdown completes, a mild pullback at the least starts almost immediately. It just completed a qualified 8 count since the high of bar 8 is higher than the highs of bars 6 and 7. A completed TD Setup would be cleaner if a bar 9 is printed. A SPX close today above 1481.29 would do the trick.
The daily SPX has been strong enough to create an imperfect 9-13-9 count. Tom DeMark has publicly targeted SPX 1492 as his target so it’s just about ready to be tagged. Also, The SPX weekly will be the first of major indices to count a 13 this week.
The problem for the bears is everyone is playing contrarian. The markets barely sold off in the morning today and the intraday Put/Call readings goes off the charts as everyone rushes to buy puts. This is not exactly bearish behaviour as short sellers ( like me ) are providing more fuel for this rally. However, I respect DeMark’s indicators, and when they are setting up, I will suit up and play them knowing not everything will play out to the day. Keep in mind back on January 10, DeMark officially called tops on the UK FTSE 100 (.FTSE), German XETRA DAX (GDAXI), and the French CAC 40 (FCHI). The Footsie and CAC calls are off a bit over 1% and the DAX is off by about 0.5%. Portfolio is still 75% short with long hedges. Around the last hour of trading, I will most likely come in at 100% short unhedged. (updated mid trading day)