Business

Charts show ‘very good summer’ for stocks

CNBC’s Jim Cramer explained veteran chartist Larry Williams’ technical analysis that suggests the market’s recent bounce could last for the next few months.

“Larry Williams accurately called the bottom the week before last. Now his analysis shows that we have much more room to move. He believes that this is not just a short-term bounce, this is a move that could last until the end of August. “, – said the host of “Mad Money”.

The Dow Jones Industrial Average and the S&P 500 posted their best weekly gains since November 2020 last week, although the three major indices, including the Nasdaq Composite, are well below their highs.

To explain Williams’ analysis, Cramer first studied the monthly S&P 500 chart starting in 2008:

According to Cramer, the vertical red lines represent times when 95% of the index was up. He noted that there were six cases from 2008 until last week, and each case was a buying opportunity.

“According to history, such a rapid rebound should be a game-changer for our beaten stock market,” he said. “According to Williams, we are dealing with a very optimistic situation. In other words, he believes last week’s giant rally could be the beginning, not the end.”

Further confirmation of Williams’ prediction that the market rally will continue is the 12-year cycle he saw for the Dow to recover, Cramer said.

Here is the chart:

“The last time this 12-year cycle predicted a major bottom move was none other than 2010, which turned out to be a great time to buy. Now, 12 years later… we had a monstrous move last week,” Kramer said. , adding that Williams sees “an extremely bullish sign.”

Williams noticed another pattern, Cramer said, the Dow’s dominant 75-day cycle, which shows that the market is about to rally before September 1st.

“In short, he thinks it’s going to be a very good summer,” the host said.

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