The 80-day trading day cycle could coincide with the DeMark depletion at the end of January
It is important to focus on this 80-day cycle as it has lined up correctly with most of the highs and lows of the past 12 months.
As long as the markets do not deviate from this cycle, I suspect that further erosion of equity indices in late January will lead to a sharp rally in March.
This would be consistent with both of DeMark’s signals, which could be confirmed on weekly charts of major technology stocks such as $AAPL, $AMZN, $MSFT, $GOOGL (which have yet to be confirmed, and in the case of $GOOGL, are premature).
In addition, hitting a bottom over the next few weeks would also be consistent with the first-half strength usually seen in the first quarter in pre-election years, which many people don’t pay much attention to. Thus, earnings could be the key factor, but for now, buying “dips” from mid-December 2022 still seems early.
An ideal scenario would be for the SPX to cross the 3,800 mark, coinciding with a sharp reversal in yields by the end of January. After that, equity markets could bottom in late January or early February and turn up by the spring, led by a sharp rebound in technology. At present, as we have discussed, this looks premature, and I expect Friday’s bounce to fail starting next week.