Tom DeMark is the founder and CEO of DeMARK Analytics, LLC and the creator of the DeMARK Indicators® library. Tom’s investment career began nearly 50 years ago at multibillion-dollar pension fund, National Investment Services, where he was ultimately tasked with researching strategies to improve the company’s investment timing. Disenchanted with the concepts available at that time, Tom began developing the proprietary models that would become the hallmark of his career.
Like many other investors and traders, Tom agrees with the widely known phrase, “the trend is your friend.” He agrees that buying often results in more buying and selling often results in more selling. However, by only following trends he believes money is being left on the table.
Tom agrees that most investors and traders follow trends, and should, but there are additional opportunities that come from understanding when a new trend is starting. These opportunities were first brought to light when Tom was helping to time the entries of the billion-dollar pension portfolio at National Investment Services (NIS). After a market top or bottom had been posted, it was often too late for NIS to enter.
As a result, Tom's trading strategy has been routed in the fact that “the trend is your friend unless the trend is about to end.”
According to Tom, market bottoms are not made because buyers identify the low, they are made because the last seller has sold. Likewise, market tops are created because the last buyer has already bought. After those times, the markets naturally start to pivot.
While Tom does not discredit understanding fundamentals for long-term market moves, he does believe that intermediate and short-term moves depend more on trader psychology.
With his ambition to pinpoint market inflection points, Tom rigorously tested and developed his now-famous DeMARK indicators. Using those tools alongside fundamental research, Tom is able to accurately predict turning points in most markets.
While Tom’s strategy is based on shades of both fundamental and technical analysis, he can’t stress enough the emphasis that must also be placed on risk management and discipline. He admits that without risk management and discipline, the trading tools he uses to time the market are worthless.
When Tom first entered the trading industry, technical indicators were few and far between. Most traders relied on fundamentals and a few relied on market sentiment. With the knowledge that Tom had gathered on market timing, this left plenty of scope for Tom to create his own indicator group.
Thanks to an unlimited research budget and time in his early career, Tom set about creating indicators to help identify trend exhaustion and provide a ‘leading’ insight to price action. These indicators are now collectively termed the DeMARK indicators.
While varying in complexity, all indicators are based on two things; (1) supply and demand, and (2) the principles of Fibonacci. When demand is greater than supply, the price increases. When supply is greater than demand, the price decreases. By applying Fibonacci principles, DeMARK indicators help to spot moments when these dynamics change.
There are now over 70 different DeMARK indicators that compose the collection. Arguably two of the most famous are known as the TD Sequential and TD Combo. If certain conditions are met, the TD Sequential indicator starts to count two sequences of numbers. The first 9-day count is called the ‘setup’ and the second 13-day count is called the ‘countdown’. A 13-day count indicates that a price inflection is imminent.
Uniquely, unlike other indicators that may be specific to certain asset classes or time horizons, DeMARK indicators are universal. After testing the indicators on years worth of data, Tom and his team discovered that they were successful at identifying inflection points across a range of different markets and multiple time horizons.
The DeMARK indicators are now owned and can be accessed through Tom’s company. DeMARK Analytics LLC.
Tom believes that the investment industry is still one of the best industries to become involved with. The potential upside is only capped by a person’s imagination and willingness to succeed. However, while the age of technology means anyone can now get involved, it does take a special kind of person to stand out.
