Ask Tom DeMark how confident he is about his most recent equity-market timing call and he will imply that it is almost a no-brainer from his perspective.
â€œIâ€™ve been stubborn and obstinate about 3,907 since November,â€ DeMark told MarketWatch in an exclusive phone interview Thursday morning.
That figure represents where the market-timing expert expects the S&P 500 index to climb over the next two or three weeks, representing a further 5% surge for the broad-market benchmark before the end of the year.
The S&P 500 is already up 15% so far in 2020, the Dow Jones Industrial Average has climbed more than 6%, while the Nasdaq Composite Index has soared nearly 42% thus far this year, after the indexes fell sharply in the spring when the coronavirus pandemic first caused the U.S. economy to slump.
But DeMarkâ€™s timing models suggest that there is more room to run in other benchmarks too.
He sees the SDPR S&P 500 ETF Trust referring to the popular S&P 500 exchange-traded fund known as the SPY after its ticker symbol, hitting 390.05, and the Nasdaq Composite topping out at 13,240 in the next half-month.
But there is a catch to that late-year equity surge. The technical analyst says that it is likely to represent a top for stocks and estimates that the S&P 500 in the first half of 2021 is likely to decline by 5% to 11%, based on his models and the natural tendencies of assets in a downtrend.
â€œThatâ€™s what our work suggests,Â confirming what the daily [and weekly trends are] going to do, indicating a potential top,â€ he told MarketWatch.
â€œItâ€™s down severely in the first half [of 2021],â€ the research wrote.
Progress on another coronavirus fiscal aid package from Congress may help to initially propel stocks higher, but DeMark doesnâ€™t pay much attention to economic data or company valuations.
â€œI donâ€™t follow fundamentals,â€ DeMark said. He quipped that he got the â€œCâ€ and the â€œFâ€ but he never got the â€œAâ€ in CFA, referring to the Chartered Financial Analyst designation, or CFA, common among investment managers on Wall Street.
Still, DeMarkâ€™s popularity stems from his extremely technical approach to making his stock market calls, employing a momentum formula that compares closing levels of the S&P 500 with those from days and weeks earlier, among other complex indicators, to make his determinations.
Heâ€™s a relatively prominent fixture on Wall Street, CFA or not, and garners a certain amount of celebrity status advising the likes of hedge-fund luminaries George Soros, Stevie Cohen and a host of other financial hotshots.
Josh Brown, ofÂ Reformed Broker fameÂ and CEO of Ritholtz Wealth Management, has described DeMark this way: â€œIn a world where everyone wants to be a market timer, you could do much worse than follow DeMarkâ€™s calls.â€
As for the rough sledding in the first half of 2021 that his models suggest, DeMark says that at one point you just exhaust the buyers.
â€œYou want to sell into strength and buy into weakness,â€ he said. â€œMarkets top not because of smart sellers but itâ€™s because the exhaustion of the last buyer.â€