Tom DeMark Sees Major S&P 500 Sell Signal Near, Expects 12-17% Decline (10/25/2012)

source: StockCharts.com

Tom DeMark, founder of Market Studies and creator of the DeMark Indicators, told CNBC's Fast Money on October 22 that "the overall trend of the market is definitely down and we're going to see a very long and extended decline. We've made the highs for the year." On Bloomberg TV on October 25, DeMark said the S&P would decline by "12 to 17%."

Marc Faber of the Gloom Boom & Doom report expects the S&P 500 to fall by 20%. So prepare yourselves.

But during the interviews, DeMark mentioned that the S&P 500 cash index ($SPX) didn't generate a "13" top indication yet like the Nasdaq, Russell, and S&P futures did in September and October. So in the near-term (possibly using the election as a catalyst), he thinks there's a chance the S&P 500 cash index, and only that index, could rally to new highs and exhaust between 1478.33-1485.33. DeMark said the same thing happened in August-September 2011 when the S&P lagged the other indices when exhausting to the downside. Very interesting, we'll see. His immediate-term call is also being supported by the uptrend line from the October 2011 low (see the chart). So that could explain the recent bounce. The S&P closed at 1414.20 today after testing the 50dma at 1434.28.