DeMark Sees Shanghai Composite Resuming Rally After Drop
By Belinda Cao - Mar 19, 2013
The Shanghai Composite Index (SHCOMP) will rally shortly after reaching a 2013 low this week, according to Tom DeMark, the founder of Market Studies LLC who correctly predicted a retreat in the Chinese stock gauge last month.
The measure of domestic Chinese equities will rebound once it falls below 2,232 on March 20 or 21, DeMark said by e-mail today. That would be the lowest level since Dec. 27 for the Shanghai Composite, which declined to as low as 2,232.13 today. The index gained 20 percent over December and January.
DeMark, the Paradise Valley, Arizona-based creator of indicators to show turning points in securities, said Feb. 6 that the Shanghai stock index would fall about 8 percent to within a range of 2,230 to 2,250 before rebounding. The gauge was down 8 percent from when he made the call to yesterday’s close at 2,240.02, as slowing manufacturing expansion to quickening inflation cloud the outlook for China’s economy.
We “are identifying a low-risk entry zone just beneath today’s low of the Shanghai Composite which should be a bottom prior to the resumption of the advance,” DeMark said by e-mail. “The Feb. 6 top was predicted and at that time the projection downside was for a correction that would terminate as low as 2,230.”
DeMark said Dec. 4 that the Shanghai Composite will climb as much as 48 percent within nine months. The 48 percent rally will be achieved before September, he said by e-mail today. The gauge has rallied 14 percent from the Dec. 4 close.
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