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TOM DEMARK: Apple's Stock Has Bottomed And Should Rally 22% From Here

Last night on CNBC, widely-followed market timer Tom DeMark told hosts that the bottom was in for Apple stock, which has been subjected to a vicious selloff over the past several months.

DeMark uses a number of indicators for market timing, and he told CNBC they are all aligning strongly in Apple's favor:

This is something akin to the low we had December 4 on the Shanghai Index, when we turned positive at the exact low.

This looks like a very strong rally of at least 22 percent. We wouldn't be surprised tomorrow to see Apple gap up above $494 or $495, despite trading lower in the after-market today, and then just move forward right from there and be strong for the next couple of weeks and reach $600. We think the low is in...today or tomorrow.

DeMark told CNBC that his firm turned bearish on Apple right at the top, and the price action in the stock since then is more or less what they would have expected:

On September 21, we turned bearish on Apple, and it was above $700...we made a prediction that the stock would go down to $494 – $494.97, to be precise. We've held to that forecast all the way down, despite those intermittent rallies.

What we did see is a freefall decline something akin to what we experienced in July, August of 2011, into the stock market low that ultimately bottomed on October 4. We saw a freefall decline, and typically what we look for is a rally and then a further decline of an equal amount from the prior decline.

So in the case of Apple, for example, we declined from about $705 down to $505, and then we rallied up to about $595 or so. If you were to take one half of that prior decline and subtract it from that high, you arrive at $494.50.

Sure enough, Apple is bouncing 1.1 percent in pre-market trading. Right now, it's less than a buck below that $494-495 level DeMark was talking about.

Click here to watch DeMark's full appearance on CNBC >



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