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China's "Manipulated" Market To Plunge Another 14%, DeMark Predicts

Tyler Durden's picture




 

Anyone tempted to gamble on buying the proverbial dip in Chinese equities after Monday’s dramatic 8.5% sell-off probably shouldn’t, says Tom DeMark, who called a top and shortly thereafter, a bottom in the SHCOMP back in 2013. 

Even after Monday’s rout, the index could fall another 14% DeMark figures, noting that "you just cannot manipulate the market."

Actually, you certainly can manipulate the market, as the Fed and the HFT crowd have vividly demonstrated, although the Chinese experience is admittedly a bit different. As we’ve argued repeatedly, the retail investors who have at times accounted for over three quarters of daily volume in China have now adopted a "sell the rip" mentality after watching their life savings vaporized in the space of three short weeks, which means that Beijing’s plunge protection efforts are met everywhere and always with immediate selling pressure. 

But the failure to manipulate won’t be for lack of trying in China, and that means the dips are met with some manner of "good news", be it a statement of support, a ban on selling, fabricated GDP data, or outright central bank plunge protection. This simply won’t work, DeMark warns. "Markets bottom on bad news, not good news. You want to have the last seller sell. We got good news at the recent low. The rally is artificial."

Here’s more on DeMark’s take from Bloomberg:

Chinese stocks will decline by an additional 14 percent over the next three weeks as the market demonstrates a trading pattern that mirrors the U.S. crash in 1929, according to Tom DeMark.

 

The Shanghai Composite Index will sink to 3,200 after plunging 8.5 percent Monday to 3,725.56 in the worst selloff in eight years, DeMark, who predicted the gauge’s bottom in 2013, said on Monday. That would extend its decline since a June 12 peak to 38 percent. The index’s moves since March are tracking those of the Dow Jones Industrial Average in 1929 when the gauge lost as much as 48 percent, he said in a phone interview.

 

"The die has been cast," said DeMark, 68, the founder of DeMark Analytics in Scottsdale, Arizona, who has spent more than 40 years developing indicators to identify market turning points. "You just cannot manipulate the market. Fundamentals dictate markets."

 

DeMark said the euphoria and panic in the Chinese market resembled that in the U.S. market in the late 1920s. The Dow Jones Industrial Average climbed for five straight years in the run-up to the crash of 1929, adding more than 200 percent. It peaked in September 1929 before plummeting almost 50 percent in less than three months.

 

DeMark said he’ll reassess the market once the Shanghai index hits 3,200, which would almost wipe out this year’s gain. If that level, which is around the 61.8 percent Fibonacci retracement from the June peak, fails to hold, the market could "unravel" quickly, he said. 

 

While some investors are concerned that the benchmark has gotten unhinged from the real value of stocks due to government intervention, DeMark said his indicators work best to pick up buy and sell signals when the market is "manipulated." That is because intervention makes the imbalance in the supply and demand of stocks "more apparent" and easier to identify, he said.

The bottom line: don't go bargain shopping for stocks in China, because as we've been saying for at least four weeks, the extraordinary air of desperation surrounding Beijing's intervention efforts has served only to exacerbate the panic and although it's not wise to bet against a central bank, it might be even more dangerous to bet against millions of angry housewives determined to cash out.

 

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Tue, 07/28/2015 - 08:59 | 6362378 Dr. Engali
Dr. Engali's picture

1987cant manipulate markets? Fundamentals matter? WTF?

 

It's as if 2008 until now never exhisted with these people. Hey asshole, remind me again what Reagan's working group on finacial markets did after 1987.

Tue, 07/28/2015 - 09:01 | 6362390 saints51
saints51's picture

I laughed at his comment also. Apparently he has not been paying attention. The FED has been manipulating markets far longer than he or even his parents have been alive.

Tue, 07/28/2015 - 09:07 | 6362405 Peter Pan
Peter Pan's picture

What an imbecile. How the f..... does he arrive at 14%? Why not 13.9% or 14.1%?

I am putting this prediction up on my toilet seat where I can keep an eye on what happens.

Tue, 07/28/2015 - 09:08 | 6362406 clooney_art
clooney_art's picture

What about the manipulated US markets ?

Tue, 07/28/2015 - 09:48 | 6362548 InjectTheVenom
InjectTheVenom's picture

who cares what this clown thinks...just keep me up on Gartman's calls ... cha-ching cha-ching

Tue, 07/28/2015 - 09:12 | 6362414 Squid-puppets a...
Squid-puppets a-go-go's picture

that was his 61% fibonnaci thingumy

but, how technicals matter in manipulated markets remains beyond me. 

Tue, 07/28/2015 - 09:09 | 6362409 tmosley
tmosley's picture

14%?  Exactly 14!? Not 15%? Not 10-20? 14.0000%?

Someone needs to teach this asshole about sigfigs. Reminds me of a chemist I used to have on my team who reported figures to ten decimals, when there were only two significant digits. It's a waste of time, and a lie. Your measurements aren't that accurate.

And in reality, it's more like another 50% for China to fall, unless he has insider knowledge about the Chinese backing the Yuan with gold after it falls that much.

Tue, 07/28/2015 - 09:21 | 6362439 saints51
saints51's picture

I almost choked on my morning coffee laughing at this comment. I can imagine the deer gazing into headlights look. HAHA!!!!!

Tue, 07/28/2015 - 09:50 | 6362555 Fish Gone Bad
Fish Gone Bad's picture

I did not know predicting the future could be so easy.  And here I've been working like some kind of sucker.

Tue, 07/28/2015 - 08:58 | 6362384 HowardBeale
HowardBeale's picture

The die has been cast. You just cannot manipulate the market

 

Tell that to the Fed.

Tue, 07/28/2015 - 08:58 | 6362385 JustObserving
JustObserving's picture
China's "Manipulated" Market To Plunge Another 14%, DeMark Predicts

And how much will the free and fair markets in the US rise during that period?

Tue, 07/28/2015 - 08:59 | 6362386 ebworthen
ebworthen's picture

Oh hell, can't we get another 25%-50% drop?

It's all phony baloney anyway.

Tue, 07/28/2015 - 08:59 | 6362387 behind the curtain
behind the curtain's picture

14% tonight? or more long-term? :)

Tue, 07/28/2015 - 09:02 | 6362396 Richard Chesler
Richard Chesler's picture

"You just cannot manipulate the market"

Actually, that depends solely on who's holding the bag.

 

Tue, 07/28/2015 - 09:05 | 6362400 Callz d Ballz
Callz d Ballz's picture

So this guy can "predict" how much a manipulated market will fall? You really can't make this shit up...

Tue, 07/28/2015 - 09:06 | 6362403 dcau1
dcau1's picture

Another fucking prediction from a talking head. Wonderful.

Tue, 07/28/2015 - 09:10 | 6362407 no1ninja
no1ninja's picture

There you go for those of you who did not think that China manipulated their GDP numbers, DeMark is right, if you are seeing them so easily manipulate their stock market and try to influance it just imagine what is happening in their bookkeeping. 

 

 

Tue, 07/28/2015 - 09:08 | 6362408 omrizario
omrizario's picture

we need more farmers to bet on the stock market

Tue, 07/28/2015 - 09:10 | 6362411 Seasmoke
Seasmoke's picture

So then he must believe the US Markets will be dropping 28% since they are twice as manipulated. 

Tue, 07/28/2015 - 09:11 | 6362412 Pumpkin
Pumpkin's picture

I wonder if he goes all in after this '14%' further decrease.  I kind of doubt it.

Tue, 07/28/2015 - 09:14 | 6362420 cwsuisse
cwsuisse's picture

"You can not manipulate the market"! Well, that is complete nonsense. Generally prices are determined today by manipulation. It begins with the interest rates and ends with the share prices. 

Tue, 07/28/2015 - 09:14 | 6362421 Fight-Club
Fight-Club's picture

China is manipulating everything it can, through various means.  Think about it.  What do they consume the most:

- Oil

- Gold

- Silver

- Copper

They are manipulating the paper price and hoarding the physical, without a doubt.

Tue, 07/28/2015 - 09:17 | 6362425 no1ninja
no1ninja's picture

IF someone adds up the know inervations, and the subsaquent rise... does it  come out to 14%?

 

He may just be quantifying the swing that looks superficial to him, or that we can cleary see is due to PBOC stepping in "publicly". 

Tue, 07/28/2015 - 09:18 | 6362430 falak pema
falak pema's picture

We have an awesome game of world tug of war between statists and Oligarchs.

The Market today is the accumulated wealth resulting from 20 years of global plays since NWO and Chindia calling made outsourcing the way to rapid wealth for the US Oligarchy. Now its gone viral in uncontrollable speculation fed on steroids.

Too much debt on public ledgers, too much wealth in private off shored accounts

The battle between statists and oligarchy controlled market is on globally. Hot money is prepared to kill any statist that wants to make his stashed wealth taxable to feed the state ledger or to feed social spend.

When thieves fall out after a 30 year mad ride...you can bet Rome is ready to burn ! 

Tue, 07/28/2015 - 09:23 | 6362442 no1ninja
no1ninja's picture

The thing is that the oligarchs do not want any of this instablitiy, but their greed was so strong that it is creating it, and when you see your neighbour offshoring his wealth, you sure as hell are not going to let yours be the easy picking back home.

 

Like folks running from a restuarant tab, first one, then the 2nd one, suddenly the last three or fourr do not want to be stuck with the others bill and they are all bolting for the door as well. 

Tue, 07/28/2015 - 09:19 | 6362434 redd_green
redd_green's picture

When the markets are dropping "they" predict the markets will drop forever. When the markets are rising, "they" predict that the markets will rise forever.    Excellent advice.

Tue, 07/28/2015 - 09:20 | 6362437 knukles
knukles's picture

He'll be thrown off of Bloomberg and asked to be on Nulandberg

Tue, 07/28/2015 - 09:30 | 6362467 Wahooo
Wahooo's picture

"...don't go bargain hunting for stocks in China..."

Don't worry, I won't. SHEESH!

Tue, 07/28/2015 - 09:33 | 6362474 FranSix
FranSix's picture

I don't understand what the fuss is about. Is everything fixed or not?

Tue, 07/28/2015 - 09:42 | 6362523 jpc578
jpc578's picture

Tom DeMark better not enter Chiona. Such comments might result in his public execution.

Tue, 07/28/2015 - 09:44 | 6362529 CHC
CHC's picture

See China's problem is they're coming through the front door to manipulate their markets and that's never a good thing.  Now...here in THESE United States...manipulators like the Fed and HFT go through the BACK door.  That's acceptable because it's more covert.  Thieves love working in darkness.

Tue, 07/28/2015 - 09:52 | 6362565 williambanzai7
williambanzai7's picture

There are no markets, only manipulations.

Tue, 07/28/2015 - 10:11 | 6362677 Kavklov
Kavklov's picture

What a DICKHEAD !!!!

What Goldman SUCKS do to the mkrt?

 

Shut the fuck up!

Tue, 07/28/2015 - 10:12 | 6362686 ableman28
ableman28's picture

It would be more accurate to say that you can attempt to manipulate the market but regardless of how much effort/money is put into it the outcome is seldom exactly what is desired.  The result is that additional manipulation has to be invested in order to course correct unintended outcomes from the prior effort.

Then it becomes a never ending process.

For those with the power to manipulate markets and attempt to do so the lesson is always once you start you can never stop.  And, when your trying to move against the real currents in the underlying economy every effort to do so builds up a greater and greater contradiction which leads to even greater anxiety over how to maintain the preferred status quo.  So you can't stop and your even afraid to try.  It is a classic addiction trap.

Tue, 07/28/2015 - 10:37 | 6362811 StrawberryBlonde
StrawberryBlonde's picture

Tom's 3200 level roughly co-incides with my 3000 1st support level as discussed here: http://www.strawberryblondesmarketsummary.com/2015/07/chinas-shanghai-in...

 

Tue, 07/28/2015 - 12:04 | 6363182 helic0ptermoney
helic0ptermoney's picture

why dont he tell us that the stock market is not a massive bubble. this way we would really show that it's not one gigantic bubble.

Tue, 07/28/2015 - 12:17 | 6363244 Turdy Brown
Turdy Brown's picture

"That is because intervention makes the imbalance in the supply and demand of stocks "more apparent" and easier to identify, he said."

So he is saying that he can make predictions BECAUSE the market is manipulated?  WTF does this even mean?  If this were true, then he should be an expert at predicting what the US markets will do as well?

This guy is so full of shit with his EXACTLY 14% prediction! 

Why aren't people like him (and Gartman) ever held accountable for their fucked up advice/predictions?  People like this should be exposed, humiliated, shamed, banished and they should be prevented from ever publishing their garbage again.   But no, they always seem to keep coming back with more BS and these pricks probably make a ton of money! 

Tue, 07/28/2015 - 14:16 | 6363782 Hoi_Polloi
Hoi_Polloi's picture

"You just cannot manipulate the market."

I puked in my mouth a little.

Wed, 07/29/2015 - 00:01 | 6365799 earlyfrick
earlyfrick's picture

this guy is a f*****g retarded clown, the market is being manipulated then how the heck he knows it would be 14%? or he is manipulating the Chinese stock market?

Wed, 07/29/2015 - 00:02 | 6365800 earlyfrick
earlyfrick's picture

this guy is a f*****g retarded clown, the market is being manipulated then how the heck he knows it would be 14%? or he is manipulating the Chinese stock market?

Wed, 07/29/2015 - 00:02 | 6365802 earlyfrick
earlyfrick's picture

this guy is a f*****g retarded clown, the market is being manipulated then how the heck he knows it would be 14%? or he is manipulating the Chinese stock market?

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