The charts suggest “a very nice summer” for equities

CNBC’s Jim Cramer explained technical analysis from veteran chart Larry Williams which suggests the recent market rebound could last for the next few months.

“Larry Williams perfectly called the bottom the week before the last. Now his analysis suggests we have a lot more room to run. He thinks this is not just a short-term rebound, it is a move that could last until the end of August “the”crazy money“said the host.

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

To explain Williams’ analysis, Cramer first looked at the monthly chart of the S&P 500 dating back to 2008:

Vertical red lines indicate times when 95% of the index has advanced, according to Cramer. He noted that there have been six cases since 2008 before last week, with each case a buying opportunity.

“If history is any guide, this kind of rapid rebound should be a major turning point for our beaten stock market,” he said. “According to Williams, we are dealing with a very bullish situation here. In other words, he thinks last week’s giant rally may be the beginning, not the end.”

In further support of Williams’ prediction that the market rally will last is a 12-year cycle he noted for the rebounds of the Dow, Cramer said.

Here is the graph:

“The last time this 12-year cycle predicted a big move from the bottom was none other than 2010, which proved to be a great time to buy. Now it’s been 12 years … we had a monstrous move last year. week, “Cramer said, adding that Williams sees an” extremely bullish sign. “

Williams noted yet another pattern – this is a dominant 75-day cycle in the Dow – which shows that the market is expected to rally until September 1, according to Cramer.

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

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