DeMark: S&P 500 May ‘Trap’ Bulls After Rally

The Standard & Poor’s 500 Index may climb above its close yesterday before starting a retreat in the next three weeks that will “trap” bulls, said Tom DeMark, the creator of indicators to show turning points in securities.
After the decline that began today ends just above 1,200, the benchmark gauge for U.S. equities may rally about 5 percent and begin a process that would signal another drop, DeMark said. The index’s peak will come in November after it closes higher on four to six successive days, he said.
“The market is going to build a trap, and many of the people who are bullish are going to be trapped,” DeMark said in an interview today on Bloomberg Television’s “Street Smart” hosted by Lisa Murphy and Adam Johnson. “It’s going to be tired and disappoint everyone.”
The S&P 500 fell 1.9 percent to 1,230.63 as of 3:45 p.m. New York time, after rallying 3.7 percent over three days.
DeMark said on Oct. 18 that the S&P 500 would climb to 1,254 before reversing and falling more than 5 percent. The index closed at 1,254.19 yesterday. His prediction last month that a decrease in the index that started Sept. 16 would end at 1,076 proved prescient when the gauge bottomed at 1,074.77.

‘Labored’ Upside

Hong Kong’s September Exports Decline for First Time in Almost 2 Years

Hong Kong’s exports declined in September for the first time in almost two years and the government warned the outlook is “bleak,” adding to the risks the city will enter a recession.
Overseas shipments fell 3 percent from a year earlier to HK$271.8 billion ($35 billion), the government said on its website today. That compared with a 6.8 percent gain in August. Exports last dropped in October 2009.
Elevated unemployment in the U.S. and Europe’s debt crisis are damping economic expansion in the city by weakening overseas demand, Financial Secretary John Tsang said Oct. 16. Trade through Hong Kong is also being hurt by moderating growth in China, the world’s biggest exporting nation.
“A prolonged period of low growth in the West, together with a soft landing in China, could mean further downside risk to export growth in the coming months,” Kelvin Lau, an economist at Standard Chartered Plc in Hong Kong, said before today’s report. “This should translate into a bigger drag on overall economic growth.”
The median estimate of 10 economists in a Bloomberg News survey was for a 6.5 percent increase in exports. None of the economists forecast a decline.
Imports increased 2.3 percent in September from a year earlier, the smallest gain since growth resumed in November 2009 after a yearlong decline during the financial crisis. September’s trade deficit was HK$40 billion, the government said.

‘Bleak’ Outlook