Ever since we learned about Tom DeMark's reputation and his current prediction, we have done more digging on the famous indicator called Tom DeMark's Sequential (TD Sequential). For a very quick introduction (although the matter is much more complicated), TD Sequential begins with TD setup which consists of 9 consecutive highs/lows compared to 4 price bars earlier, and marks a top/bottom respectively. After the TD setup is completed (after the 9th bar), TD countdown can begin, which is now a staggered 13 count of bars having closes higher/lower compared to 2 bars earlier. TD setup and TD can be traded individually, but if these 2 happen in sequence (TD Sequential) then the likelihood of a major top/bottom is very high.

As reported here, Tom DeMark is predicting the SP500 and the Nasdaq is in a near-term top. Those who went short the market right after the post may be feeling a little worried as the market has been making new all time highs on Wednesday and Thursday, and the good jobs number certainly did not help the short case, as the market made new high again on Friday. However, to stay in this game, you must remember that when sentiment is good, that is the time to sell, and vice versa, when sentiment is bad, that is the time to buy. Market making multiple all-time highs last week would be a catalyst for investors to sell their positions this week, which would subject the market to a decline. At that point, buyers have to step in, else market would continue to fall.

So let's provide an update on how DeMark's indicators look on the SPX (for SP500). Each chart is followed by narration.

Muted reaction from the jobs release on Friday deferred any potential reversal until early next week, possibly as soon as Monday’s trading session. Through the 4 hour S&P 500 (SPX) timeframe, an opening gap higher to start Monday should activate a perfected TD Sell Setup @9. 

The daily SPX recorded a TD Sell Countdown @13 at the close of Friday, August 6th. A satisfactory correction from a 13 count would be a minimum drop of 5.5%. Currently, the market has been demonstrating corrections of 3% or more are non-existent due to underlying rotations. To achieve at least a 5.5% or greater pullback, the 90/120 minute TDST Support needs to be taken out at 4402.30. At that point, the odds can start shifting more towards sentiment that is bearish. 

The weekly SPX has recorded a TD Sell Setup @9 to close last week. This also notches the weekly timeframe back in price exhaustion territory. Since this is the weekly timeframe, keep in mind there is room to move higher when observing it on a day to day basis; it is the weekly chart that should show an overall red candle and subsequent decline. Also keep in mind, TD Sell Countdown has only recorded a 9 count which can push out a significant correction until September.