Aug. 16 (Bloomberg) -- U.S. stocks may slip to new lows in
the next few weeks, setting the stage for a rally of more than
20 percent in the Standard & Poor’s 500 Index, said Tom DeMark,
the creator of indicators meant to identify turning points in
the price of securities.
The S&P 500, which closed at 1,204.49 yesterday, will
probably drop below the 11-month low of 1,119.46 set on Aug. 8
before surging above 1,363.61, its peak on April 29, DeMark said
during an interview in London today.
DeMark said the rebound in stocks may last two to three
months and also push the Dow Jones Industrial Average and Nasdaq
Composite Index above their 2011 highs. Shares of European banks
including Societe Generale SA and BNP Paribas SA “look like
buys” after tumbling this month, he said.
“We’re at the point right now where the next trip down
will probably generate a buy signal,” said DeMark, founder of
Market Studies LLC. “Everything we follow is indicating the Dow
Jones and the S&P should make a minor new recovery high, and
probably the Nasdaq, too.”
U.S. stocks posted unprecedented swings last week as
investors weighed signs of a resilient global economy against
the first downgrade of America’s top credit rating by S&P and
Europe’s debt crisis. The S&P 500 plunged 6.7 percent on Aug. 8,
before surging 4.7 percent, dropping 4.4 percent and jumping 4.6
percent. Societe Generale and BNP Paribas, both based in Paris,
sank to the lowest levels since 2009 on Aug. 10.
Banks Rally
Societe Generale has since rallied 14 percent, while BNP
Paribas gained 5.3 percent and Zurich-based UBS AG,
Switzerland’s biggest lender, advanced 17 percent.
“We’ve got the European banks all bottoming right now,”
DeMark said. “SocGen, BNP, they all look like buys.”
DeMark said during an interview in January that U.S. stocks
were within weeks of “a significant market top.” The S&P 500
sank 1 percent the next day, the most in two months. It then
rose 4.8 percent to close at 1,343.01 on Feb. 18 before dropping
6.4 percent to 1,256.88 through March 16.
Equity indexes are unlikely to climb back soon to the
record highs reached in October 2007 given that the longer-term
trend for stocks is bearish, DeMark said. The S&P 500 closed at
an all-time high of 1,565.15 that month.
“The overall trend is down,” he said. “You might be able
to squeeze out minor new highs in spite of that.”
the next few weeks, setting the stage for a rally of more than
20 percent in the Standard & Poor’s 500 Index, said Tom DeMark,
the creator of indicators meant to identify turning points in
the price of securities.
The S&P 500, which closed at 1,204.49 yesterday, will
probably drop below the 11-month low of 1,119.46 set on Aug. 8
before surging above 1,363.61, its peak on April 29, DeMark said
during an interview in London today.
DeMark said the rebound in stocks may last two to three
months and also push the Dow Jones Industrial Average and Nasdaq
Composite Index above their 2011 highs. Shares of European banks
including Societe Generale SA and BNP Paribas SA “look like
buys” after tumbling this month, he said.
“We’re at the point right now where the next trip down
will probably generate a buy signal,” said DeMark, founder of
Market Studies LLC. “Everything we follow is indicating the Dow
Jones and the S&P should make a minor new recovery high, and
probably the Nasdaq, too.”
U.S. stocks posted unprecedented swings last week as
investors weighed signs of a resilient global economy against
the first downgrade of America’s top credit rating by S&P and
Europe’s debt crisis. The S&P 500 plunged 6.7 percent on Aug. 8,
before surging 4.7 percent, dropping 4.4 percent and jumping 4.6
percent. Societe Generale and BNP Paribas, both based in Paris,
sank to the lowest levels since 2009 on Aug. 10.
Banks Rally
Societe Generale has since rallied 14 percent, while BNP
Paribas gained 5.3 percent and Zurich-based UBS AG,
Switzerland’s biggest lender, advanced 17 percent.
“We’ve got the European banks all bottoming right now,”
DeMark said. “SocGen, BNP, they all look like buys.”
DeMark said during an interview in January that U.S. stocks
were within weeks of “a significant market top.” The S&P 500
sank 1 percent the next day, the most in two months. It then
rose 4.8 percent to close at 1,343.01 on Feb. 18 before dropping
6.4 percent to 1,256.88 through March 16.
Equity indexes are unlikely to climb back soon to the
record highs reached in October 2007 given that the longer-term
trend for stocks is bearish, DeMark said. The S&P 500 closed at
an all-time high of 1,565.15 that month.
“The overall trend is down,” he said. “You might be able
to squeeze out minor new highs in spite of that.”
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