Recycled DeMark Counts And S&P 500 Performance

BULLISH SIGNAL APPEARED THIS WEEK

While there are some legitimate short-term concerns related to sentiment and market breadth, we also must consider the potential bullish implications of a series of extremely rare DeMark signals that have appeared on the daily chart of the S&P 500.

DeMark counts are proprietary tools from Market Studies, LLC that help identify possible trend exhaustion via a 9-13 count. In very rare instances, when trends and momentum are strong, DeMark counts are recycled. A recycled count is denoted by the blue R shown in the image below.

As of Thursday’s close the daily DeMark Combo count is being recycled. If the recycled state remains in place, it would be helpful to know:

• How many times has the S&P 500’s daily DeMark Combo count been recycled since 1982?

• How did the stock market perform following the recycled counts?

Given a recycled count occurs in instances marked by strong trends and momentum, we would expect a recycled count to lean bullish from an odds perspective. There have been five previous periods that featured the same signal that is currently appearing on the daily chart of the S&P 500; in every case stocks were higher looking out one-month to five-years.

RECYCLED COUNT IS PART OF THE WEIGHT OF THE EVIDENCE

The recycled count, like any other bullish or bearish form of evidence, speaks to odds. This week’s CCM weekly stock market video, due to be released Friday evening November 15, will cover other forms of evidence, including detailed comparisons to bearish periods in 1929, 1974, 1987, 2000, and 2007. This week’s video will contain many important charts to help us fairly assess both sides of the bull/bear coin.