CNBC’s Jim Cramer said Tuesday that the stock could bottom out later this month and offer investors an opportunity to add to their portfolios.
“The charts, interpreted by Larry Williams, show a bear market that is more or less…toast and, even if the current rally stops, he predicts a big move by the end of the month. this or early November,” Cramer said.
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Stocks rise on Tuesday after August jobs report that indicates that the labor market is cooling downcontinued uptrend from the previous session.
Cramer says Williams wouldn’t be surprised if the current rally ended, but he still believes there will be a meaningful bottom near the end of the month, followed by a rally through Election Day on Nov. November 8
“In other words, he thinks you should be prepared for a great buying opportunity, even if the current move is cancelled,” Cramer said.
To explain Williams’ analysis, he first looks at the chart of S&P 500 futures, in black. The chart also features what Williams calls a true seasonal pattern, in blue.
The pattern is based on historical action at any given time of year, and Williams notes that markets tend to bottom in mid to late October and then lead to a “strong” rally. Cramer said.
Then he looked at the chart of the Dow Jones Industrial Average with the same true seasonal pattern.
The Dow also happened to have a double bottom, followed by a rally around the same time as the S&P 500, meaning there would be a big buying opportunity, he said.
For more analysis, see Cramer’s full explanation below.