CNBC’s Jim Cramer explained technical analysis by veteran graphic designer Larry Williams that suggests the recent market rebound could last for months to come.
“Larry Williams set the record straight last week. Now his analysis suggests we have a lot more room to run. He thinks it’s not just a short-term rebound, it’s 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 last week saw their best weekly gains since November 2020, although the top three indices, including the Nasdaq Composite, are well below their highs.
To explain Williams’ analysis, Cramer first looked at the monthly S&P 500 chart for 2008:
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Vertical red lines indicate times when 95% of the index advanced, according to Cramer. He noted that there have been six instances since 2008 before last week, with each instance an opportunity to purchase.
“If history is a guide, that kind of quick bounce should be a major turning point for our defeated stock market,” he said. “According to Williams, we are facing a very bullish situation. In other words, he believes that last week’s big rally may be the beginning, not the end.”
Another support for Williams’ prediction that the market rally will last is a 12-year cycle he has watched for the Dow’s rebound, Cramer said.
Here is the chart:
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“The last time this 12-year cycle predicted a major movement in the bottom was no less than 2010, which turned out to be a great time to buy. Now it’s 12 years later … we having a monstrous move last week, “Cramer said. , and adds that Williams sees an “extremely bullish sign.”
Williams noted another pattern, this is a dominant 75-day cycle in the Dow, which shows that the market should bounce back by Sept. 1, according to Cramer.
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“In short, he thinks it will be a very pleasant summer,” said the host.
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