China Stocks Close Down Another 5.3%, Tom DeMark Says It's Rally Time

Mr. DeMark has been early or wrong on his recent market calls so be wary, tight stops etc.
From ZeroHedge:
US Traders Walk In To Another Bloodbath

Lots of sellside squeals this morning following the epic bloodbath in China, where in addition to what we already covered hours ago, has seen at least five companies  (China Development Bank, Shanghai ShenTong Metro, China Three Gorges Corp., Doosan Infracore China Co. and Chongqing Shipping Construction Development) delay or cancel bond offerings as the PBOC's admission of capital "misallocation" is slowly but surely freezing both bond and stock markets. And while the plunge was contained first to China, then to Asia, then to Europe (where the Spanish 10 Year once again surpassed 5% as expected following the carry trade unwind), with the arrival of bleary-eyed US traders the contagion is finally coming home.

In a redux of last week, 10 Year yields are shooting up, hitting as high as 2.63% a few hours ago, while equity futures are now at the lows of the session. It could turn very ugly, very fast, especially if the Hamptons crowd were to actually read the stunning BIS annual report released on Sunday, which not even Hilsenrath explaining "what the BIS really meant" will do much to change the fact that the days of monetary Koolaid are ending.

DB's Jim Reid summarized the angst among Wall Street quite well earlier:

There was plenty of weekend news to digest but most of it seemed to circle around three main themes: China, the implications of June’s FOMC and the situation in EM. Starting with China, domestic financial stocks (-4.0%) are seeing sharp losses this morning amid ongoing news flow around liquidity tightness in the interbank  market.

In terms of the latest on bank liquidity, the PBoC posted a statement on its website today that said banking system liquidity remains at a “reasonable level”, but warned that Chinese banks must control liquidity risks from credit expansion. This came after China Development Bank, the country’s policy bank became the latest institution to cancel a bond sale (originally scheduled for tomorrow). The official state news agency, Xinhua, wrote over the weekend that "it is not that there is no money, but that the money has not reached the right places". The article suggested that a misallocation of funds into wealth management products had caused the tightness in liquidity in some banks. Indeed, Fitch noted last Friday that more than CNY1.5 trillion in WMPs - substitutes for time deposits - will mature in the last 10 days of June. Issuance of new products, and borrowing from the interbank market, are among the most common sources of repayment for maturing WMPs, and the recent interbank liquidity shortage complicates both....MORE

Meanwhile, at Bloomberg:
DeMark Predicts Rally as Shanghai Index Bottoms: China Overnight

The Shanghai Composite Index (SHCOMP) will jump about 12 percent in coming months as its June slump exhausts sellers, said Tom DeMark, the creator of indicators to show turning points in securities. 

The benchmark index for Chinese equities will climb to 2,323 after producing a buy signal June 21 on the Combo chart, designed to identify market tops and bottoms, said DeMark, who has spent more than 40 years developing market-timing indicators. The Shanghai index fell 9.9 percent in June through last week, poised for the worst month since August 2009, while the Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. lost 6.5 percent.

“I had not received any indication of possible bottom since February until now,” DeMark wrote in an e-mail from Scottsdale, Arizona on June 21, in reference to the Combo chart. “The indication of an immediate market reversal does not exist as clearly currently and it may require a couple of days for Shanghai Composite to gain upside traction. Regardless investors should be prepared for a rally.”...MORE

I'm not sure if that "February" statement contradicts this from our April 22 post "Lines on Charts: Connect the '87 High, the 2002 Low and the 2007 Highs (and where's Tom DeMark been hiding?)":

Mar. 19, Bloomberg:
DeMark Sees Shanghai Composite Resuming Rally After Drop
Chinese equities will rebound once it falls below 2,232 on March 20 or 21 

In addition to the Shanghai call, which seems pretty specific, Mr. DeMark called for a 22% rally in Apple on Jan. 16 at $506.09, In early premarket the stock is changing hands at $409.35.
On the other hand he gets beaucoup credit for:

DeMark Sees China Index Rally as Bears Exhausted Below 1,960

"The Shanghai Composite Index (SHCOMP) will rally 48 percent within nine months after its decline below 1,960 signaled selling has climaxed, according to Tom DeMark, the creator of indicators to show turning points in securities.
The benchmark index for Chinese equities will advance to 2,900 after its decline produced a buy signal on the Sequential and Combo charts, designed to identify market tops and bottoms..."

on Dec. 4, the index bottomed at 1,959.77 on Dec. 3.
We didn't realize what was happening until the next day, Dec. 5.
Today's close at 1,963.24 is the lowest since Dec. 3.

Here's the recent action in Shanghai: