The stock market has attracted a lot of attention recently. The S&P 500 soared double-digits in a brilliant run after Trump suspended most of his reciprocity tariffs on April 9 after President Trump's tariff announcement on April 2.
The climb is still climbing despite economic data showing that the U.S. economy is slowing after the remaining tariffs, with the risk of recession increasing, including a 145% tariff on China, which has allowed companies to reassess the outlook for the year.
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With stocks now back to what Trump’s tariff announcements and emotional indicators began to warn, there is good reason to doubt whether there is still time to “buy dipping sauce” or whether investors should shift gears and “sell RIP.”
The uncertainty caught the attention of veteran Wall Street analyst Tom DeMark, who has spanned nearly 50 years of career advice to major currency management companies and hedge fund managers such as Goldman Sachs, Paul Tudor Jones, George Soros and Leon Cooperman.
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In the fifty years of sailing market, Demark has front seats and has arrived at a lot of good and bad market videotapes. Recently, he released a bold prediction that could upset investors.
The Fed has enough hands this year. Its task is a dual task to keep inflation and unemployment low, but these goals are often contradictory, especially this year.
If the Fed raises interest rates, it could slow down the economy, thereby reducing inflation. However, this can lead to unemployment. Additionally, if the Fed lowers interest rates, economic growth can increase jobs and increase inflation.
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As a result, Federal Reserve Chairman Powell had to walk the rope at interest rates this year. The Fed's hawkish monetary policy in 2022 and 2023 caused inflation, but rising unemployment prompted it to change gears in the second half of last year, slowing its pace in September, November and December.
Unfortunately, inflation has stalled, and even rising layoffs and softening GDP have forced the Fed to enter the market.
Compared to September last year, the consumer price index inflation rate in April was 2.4%. Meanwhile, the unemployment rate rose to 4.2% from 3.4% in 2023.
In April, the company announced 105,441 layoffs, a year-on-year increase of 63%. This will be up 602,000 at the beginning of the year, up 87% according to Challenger, Gray and Christmas.
Current tariffs, including 145% in China, 25% in Canada, Mexico and automobiles, and benchmark tariffs on all imports, could lead to a simultaneous rise in inflation and unemployment, putting the Fed in a difficult situation.
Due to the tariffs, consumer confidence stumbles greatly, which may cause consumer confidence to stumble greatly. In April, the University of Michigan's consumer sentiment survey fell 8% to 52.2 from March, the fourth lowest reading since April 1952. Consumer expectations for inflation in the coming year soared to 6.5% from 5% last month.
Tom Demark became a top consultant to some of the world’s most outstanding managers by developing his proprietary tools to measure what might happen to the stock next.
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His company, Demark Analytics, buys and sells signals on the mathematical relationship between price and time, which may find that market turns may be caused by fatigue from buyer or seller.
While many technical analysts focus on determining the occurrence of trends, Demark named itself by predicting when inventory may peak and lowest. Given that he can correctly predict the February S&P 500 S&P 500 and April lows, his approach still works today.
While the recent stock moves are impressive, Demark believes it is over.
"The top is imminent," Demark told Bloomberg. "Stocks are vulnerable now, and if anything changes very quickly on the global trade outlook, it's easy to get hit. ”
Demark's research shows that the S&P 500 may stagnate due to the buyer's exhausted 5,669. The S&P 500 closed on May 3, 5,687, and 5,650 on May 5.
Ensuring the possibility of a decline could bring the S&P 500 back to its April low of 4,835. If so, it would drop 20% from its February high, bringing it directly into bear territory.
“Historically, like last month in terms of positive trade development, the market isn’t good news,” Demark said. “When everything is bad and everyone is forced to throw a towel, inventory usually goes down – but that hasn’t happened. Stocks just happened to be oversold and bounce prematurely.”
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