CNBC’s Jim Cramer said Tuesday that stocks could bottom later this month and give investors a chance to add to their portfolios.
“The charts, as interpreted by Larry Williams, indicate that the bear market is more or less … toast and, even if the current rally is stalled, he predicts a big move either towards the end of the month this or the beginning of November,” Cramer said.
Stocks gained on Tuesday after an August job openings report showed the labor market is cooling, continuing the rally from the previous trading session.
Cramer said Williams wouldn’t be surprised if the current rally ends, but he still believes there will be a meaningful bottom near the end of the month, followed by a rally through Election Day on November 8.
“In other words, he thinks you should be prepared for a great buying opportunity, even if the current move is revoked,” Cramer said.
To explain Williams’ analysis, he examined the S&P 500 futures chart, in black. Also on the chart is what Williams calls the true seasonal pattern, in blue.
The pattern is based on historical action at any given point in the year, and Williams notes that the market tends to bottom out in mid-late October and enter a “powerful” rally. Cramer said.
He then looked at a chart of the Dow Jones Industrial Average with the same true seasonal pattern.
The Dow also happens to have a double bottom followed by a rally around the same time as the S&P 500, which means there should be a great buying opportunity, he said.
For more analysis, see Cramer’s full explanation below.