Tom DeMark Says Put Your "Dow 20,000" Hats Away

Tyler Durden's picture

As Vicent Cignarella, FX strategist who writes for Bloomberg, writes overnight, the "Dollar Rally May End If Dow Fails to Pass 20,000" and the one variable that might determine if it does, is Donald Trump. Here's why:

President-elect Donald Trump’s first press conference in six months will need to include some policy specifics if U.S. stocks and the dollar are to continue their post-election rallies. The Dow Jones Industrial Average has led the dollar higher since the November election with a correlation above 0.85, but a potential problem for dollar bulls has emerged as two technical indicators show the blue-chip index’s recent surge will leave it short of the 20,000 milestone.

 

Tom DeMark’s TD Sequential is signaling a pullback in the Dow at the same time mean reversion technicals are flashing caution. The indicator is a trend-reversal technique designed to predict a turn in a market using exhaustion points to determine peaks and troughs. “If everyone anticipates 20,000 will be broken they are already in the market awaiting that breakout, so what impetus is left to move the market above that level,” DeMark said in a Jan. 6 Bloomberg TV interview.

 

The equity index has failed to stay above the second standard deviation from its annual mean a handful of times in the past month, suggesting its next breakout will be to the downside. The Dow gained as much as 9% after the election and on Friday climbed within 0.37 point of the round-number milestone. The dollar hit a 14-year high on Jan. 3. A retreat in the Dow accompanied by a dollar slide would only worsen if the President-elect doesn’t deliver policy substance as markets are looking for clarity on everything from infrastructure spending to trade agreements that will impact the economy.

And here are some further details from Bloomberg, why traders can count Tom DeMark among the growing group of skeptics that the Dow - which hit 19,999.63 last Friday and faded - will rise above 20,000 anytime soon.

The chart analyst said investor psychology is acting as a ceiling on the gauge - everyone who expects the level to be surpassed has already purchased stocks, leaving an absence of buyers whenever it gets close. 

“We’ve been confident the last three weeks we would not break 20,000,” DeMark said in an interview on Bloomberg Television. “I assume there’s a possibility intraday we could, but it’s so unanimous, it’s almost as if the election were being replayed within the market. Everyone’s confident the market’s going to break 20,000. If it does break, it may go quite a bit higher. But I don’t think it’s going to happen.”

The stock market appears to be in a topping process that traces back to its November low, DeMark said, citing a technical indicator known as an offset 13 in the Dow average that was hit in the last two days and flashes sell.

"It’s unanimous, every market, even the derivatives, they’re all identifying tops at this time, all upside projections,” he said. “The Asian markets fulfilled their highs three weeks ago, a month ago, two months ago. The European markets, some have already fulfilled their tops, one or two may have one additional day."

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Croesus's picture

I say "Put this government away".

These burned-out shits, need to be "put on ice".

bania's picture

too much "fugazi" in the system, 20k is arbitrary. If the monster needs 20k to suck in more suckers, by golly the monster will get it.

Stainless Steel Rat's picture

The room turns and looks at Gartman.

For Ages We Shall Reign's picture

Keep buying goysh! Trusht in the fundamentals!

OfAllElaboratePlans's picture

 

<--- Asshats

<--- Dow 20,000 hats

asteroids's picture

DeMark should be putting emphasis that this topping process takes months to unfold. Therefore, your timeframe should be months, not days or weeks.

Rainman's picture

wait...now wtf am I supposed to do with this bulging inventory of 20k hats ?

spastic_colon's picture

sell 'em to the japs......except change them to Nikkei -20k

techpriest's picture

Wait until inflation gives us Dow 20K, and Gold 20M.

spastic_colon's picture

it will break 20k friday as a tribute to MLK........it seems to be this admins MO

Osmium's picture

"And here are some further details from Bloomberg, why traders can count Tom DeMark among the growing group of skeptics that the Dow - which hit 19,999.63 last Friday and faded - will rise above 20,000 anytime soon."

Well, that should do it.  20k here we come.

American Gorbachev's picture

conversely, i suspect Dow 20k is being put off until friday/jan 20

(part fu to obama, part reagan/hostages redux)

 

Dave the jew's picture

Until the 21st .....

crosey's picture

An algo-driven short squeeze would do the trick.

Arnold's picture

No human precision could have hit that mark.

The machine is obeying commands for now.

 

19,999.63

I only have four place accuracy on my slide rule.

rccalhoun's picture

Getting with 1 point sure appeared 'scripted'. 

johand inmywallet's picture

It's gonna crash, get the helmets out!!

FreeShitter's picture

As long as CTRL-P is the monetary policy, it will go up. It has to.

techpriest's picture

Which is first?
< Dow 20,000

< Dreybin/fonestar trolls about bitcoin 20,000 times

wisehiney's picture

You get what you pay for.

NoWayJose's picture

I figured Trump's presser would spike the Dollar - he is only going to repeat things that the Long Dollar people want to hear. So yesterday I placed a ladder of GTC orders for paper gold below yesterday's price - to catch any down spikes. Got the first hit and waiting for any bigger plunge for the others. These gold dips have been sharper lately with quick rebounds - keeping the monkeys from hammering.

If anything, I expect to hear a lot of 'investment' and tax cuts - but not much in budget cuts or explanations on how to pay for these things. That should be bullish for gold once the reality sinks in.

NoWayJose's picture

BINGO - got two hits at cheap prices then gold hits the UP elevator button.

jamesmmu's picture

Alot of downgrades today, wonder what happen next

Market Rage's picture

As long as it's near 20K, people will will keep trying to front-run.  More time for distribution.  I think it needs to breach it for a minute or two and suck in the bagholders. 

Traderone's picture

Yep, they said that at 11K, 12K, 13K,,,you get the idea.

scoutshonor's picture

Sometimes markets are driven by circumstance.  For example, today I woke up with a raging case of hat head and I got stuff to do--outside stuff, so Walla 20K.

small axe's picture

Meanwhile, back in real time, HFT is harvesting the latest crop of bullshit stop-running manipulation

Red Wire's picture

Hi guys, check out my latest video update on the S&P00:

https://www.youtube.com/watch?v=AjQsjiiHjDo

svs9000's picture

Once Trump starts talking...CRASH!!!

bah dah dah dah dah... I'm Lovin it!

White Knight's picture

Zerohedge, it is ime to get the jump on everyone else and make Zerohedge sponsored DOW almost 0 hats for when it finally burns. I'll buy one.