Since he started in the investment business in 1971, DeMark has advised some of the biggest names on Wall Street, men such as Paul Tudor Jones and Leon Cooperman. He’s a consultant to Steven Cohen, founder of SAC Capital Advisors, which manages $14 billion, and John Burbank, founder of $3.4 billion Passport Capital. SAC and Passport each own a piece of DeMark’s company, Market Studies. DeMark has a phone on his desk that’s dedicated to Cohen, whose hedge fund has made money every year save one since 1993.
DeMark’s system for predicting where markets will move, divined from four decades of chart gazing, is based partly on the recondite mathematical relationships that devotees see in the design of the Parthenon in Athens and the Great Pyramid of Giza. Get DeMark’s followers talking, and their enthusiasm for his market calls is unbounded.
“When I use DeMark’s work, I feel like I’m wielding Thor’s hammer,” says David Goel, managing partner at hedge fund Matrix Capital Management, which manages $2 billion. In Norse mythology, the thunder god Thor carries a massive mallet with which he crushes mountains.
Burbank says that he’s tested DeMark’s algorithms and that they’re much more predictive than other systems. “Using DeMark indicators is like seeing the market in color, when before you were looking at it in black and white,” he says.
Among DeMark’s calls: On Sept. 22, 2011, he said the Standard & Poor’s 500-stock index would soon bottom at 1,076 and then rise 20 percent. The S&P touched 1,074.77 intraday eight trading days later and had moved up 20 percent by Jan. 10. His system also flashed buy just before a July rally in oil futures and an August surge in silver.
His latest call on stocks was Oct. 24, when he said the S&P would reach 1,480 — a new high for the year — within two weeks, then reverse. He was right about the decline, not the peak. The index rose to only 1,434 intraday before falling. As of the market close Nov. 12, it had dropped 3.8 percent from that high.
DeMark, 65, is a member of a group of market forecasters who devote their days to poring over price charts, looking for recurring mathematical patterns. Most call themselves technical analysts, as opposed to those who rely on fundamentals such as earnings and economic growth. DeMark says fundamentals do matter. He also believes that markets are governed by waves that crest and fall based on a series of numbers called the Fibonacci sequence and the closely related golden mean, or golden ratio.