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Charts Show Inflation May Cool Down Faster Than Expected

CNBC’s Jim Kramer said on Wednesday that longtime tech expert Larry Williams believes the stock market may turn out to be stronger in 2022 than many Wall Street forecasts.

“The charts, interpreted by the legendary Larry Williams, suggest that inflation could cool faster than most financial managers expect, which would mean that 2022 … could be a much better year for the market than we expect,” Kramer said.

An anchor for Mad Money said Williams, who often uses historical data to make forecasts for the cycle, believes inflationary pressures in the US “should be at their peak by now.” While Kramer warned that the Williams cycle for the Consumer Precise Index is not an accurate timing tool, he said it was worth considering.

Forecast cycle of technical specialist Larry Williams for the CPI from 2010 to the present.

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“In his opinion, [the first quarter] should be really the last, really bad quarter for inflation, ”Kramer said. If Williams is right, Kramer said it would have implications for the stock market because it could mean the Federal Reserve doesn’t need to tighten monetary policy as aggressively as expected.

“This is not the only reason Williams is optimistic about stocks in 2022,” Kramer said. Another reason for Williams’ positive outlook can be found in the ten-year model, which refers to the average market return based on the last digit in a particular year.

Comparing the average number of years ending in the digit ‘1’ versus the actual trading of the Dow Jones Industrial Average in 2021 proved to be a “very useful benchmark” last year, Cramer said. “You have to ignore the scale and just look in the direction of travel,” he said.

Average Dow return for years ending in ‘1’ compared to Dow performance in 2021.

Mad Money with Jim Kramer

According to Cramer, Williams found that the ten-year chart for years ending in the digit “2” indicates that 2022 may be quite volatile for the Dow Jones. In particular, according to him, it is expected that in June or July prices for shares will fall to “a significant minimum.”

According to technical specialist Larry Williams, the average return on the Dow for years ending in the number “2”.

Mad Money with Jim Kramer

“Then in September, you will have another amazing buying opportunity as the market tends to skyrocket in the fourth quarter,” Kramer said. “Williams also points out that historically, in years ending in the number 2, you want to buy on any big sell-off,” because the market usually has a stable year, added Kramer.

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