Impossible to predict the

Market prediction with God math

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.

Fibonacci numbers appear in this infinite sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34 . . . — where each number is the sum of the previous two. Divide one Fibonacci number by its predecessor, and the quotients will cluster around 1.618 — the golden mean, or the “divine proportion.” Technical analysts say that both can be used to predict a market’s direction, and some say they’re literally divine.

“This mathematics is embedded in the structure of the universe, ” says Cynthia Kase, whose Kase & Co. uses wave analysis to compile a weekly forecast for oil and natural gas prices. “It is the language of God.”

Technical analysis is in the midst of a post-financial-crisis boomlet. Tyler Wood, marketing director at Market Technicians Association, says there has been a 30 percent jump in new members in the past two years, pushing its rolls to 4, 500 as of mid-October.

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