CNBC’s Jim Cramer said Tuesday that stocks may bottom out later this month, giving investors an opportunity to add to their portfolios.
“The charts suggest that the bear market is more or less…toasty, as interpreted by Larry Williams, and even if the current rally stalls, he could be heading towards the end of this month or early November. I’m predicting the movement… Said.
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Tuesday’s gains continue their rally from the previous trading session, following August’s jobs report that showed the labor market was cooling.
Cramer said Williams wouldn’t be surprised if the current rally converges, but believes there will be a meaningful bottom near the end of the month, after which the rally will continue through Election Day on November 8.
“In other words, even if the current move is reversed, he believes we should be prepared for a great buying opportunity,” Cramer said.
To illustrate Williams’ analysis, he first examined the S&P 500 futures chart in black. The graph also shows in blue what Williams calls the true seasonal pattern.
The pattern is based on past behavior at any given point in the year, with Williams pointing out that markets tend to bottom out in mid- to late-October, followed by a “strong” rally. increase.
Next, we looked at the Dow Jones Industrial Average chart, which has the same true seasonal pattern.
Also, the Dow can rise following a double bottom around the same time as the S&P 500.
For a detailed analysis, see Cramer’s full explanation below.