Bloomberg BusinessWeek’s Sheela Kohatkar reports that widely-followed market timer Tom DeMark is feeling uneasy about the stock market, as the current pattern seems to be tracking the months leading up to the 1929 crash.
Kohatkar relays DeMark’s comments:
“The market’s going to have one more rally, then once we get above that high, I think it’s going to be more treacherous,” DeMark says. “I think it’s all preordained right now.” He feels this is probably irrespective of how and when the crippling impasse in Washington is resolved.
“If you look at the new highs and new lows on the [New York Stock Exchange],” he says, “every time we made a higher high, there were fewer stocks in the index participating in that high. It’s getting narrower.” And once that happens, you typically get a collapse.
The chart below shows what DeMark is looking at.