Larry Williams: Is a Year-End Stock Market Rally Coming?

[00:00:00] Speaker 1: hi gang Larry Williams here for stockcharts.com and it's almost Halloween time so is it trick or is it treat this year well one thing for certain I think the markets have been really scary they've been really confused markets about as confused as I've seen in my 64 years of following the markets let me show you why there's a real problem here there's been three different markets really the Dow quality stocks have been the weakest if we look at those there's the Dow Jones you can see what happened starting August we've been in a big decline wow but if we look at the Nasdaq since August it's been a big rally like what a difference we have here if we look at the S&P that July bottom a big rally up in the marketplace so what's going on and what can we do about it what does this all mean to us there's a New York Stock Exchange index as well look at that it's also been coming down so the majority of stocks the New York Stock Exchange the Dow the quality stocks have been in a down move as you can see while the active stocks the hot stocks if you will the high-tech stocks well they've been in a nice up move so how do we go about handling this situation what does it mean as an investor and as a trader I'm going to address that issue today I'm going to also give you some of my favorite stock picks coming up right here right now you'll see what those stocks are and why so well you know this which one of those doesn't belong in the New York Stock Exchange the Dow the S&Ps the Nasdaq so which one do we want to focus on here are those indicators and it really this is one of the big secrets of the market the worst looking one has been the Dow the Nasdaq or the S&P has been the strongest and one thing that I think is a really hard lot to learn about the market is that strong gets stronger Newton said it best an object set in motion stage in motion so our temptation is to buy the Dow because it's been the weakest so it should rally the most and it's been weak for a reason so will it rally the most the odds are with about an 80 percent probability the Dow will not be as strong on any rally or the very short term at least as the stock could have been the strongest it's kind of like my old adage if you're walking into a bar and you want to get in a fight with somebody you're going to pick a fight with the biggest guy in the bar or some weak looking guy over his bar stool by himself obviously the weak guy so you don't want to buy the weakest of these indexes you want to look on strength and the indexes now to feather that in you'd want to look at the market over the last 10 15 days as well so we know in a longer term view we just saw clearly the Dow and the New York Stock Exchange have been the weakest but I still like to look at like 10 15 days to see here to see if there's any rotational change going on because we have seen massive rotational change in this market as we saw with the Dow down and the other indexes up so let's focus our view now over the last 10 15 days and then make your choice of which market index is going to rally the best so the answer to all this or really it's a stock market but it's also a market of stocks so you could buy the index as an average or you could focus on some individual stocks and that's what i'm going to be talking about quite a bit today but let's go back to last time i was on stockcharts.com this is the chart we showed of the nasdaq we said we were right here that was middle of may and that's a general path that the market should follow and there's middle of may and this is a path the market has generally followed this red line up so we can get a decent view of the future precise view that's never 100 precise or occasionally we get lucky and it looks that way but truth is we can get a good general idea of the road map that markets on we looked at the dow also at the same time last may and said well it's a little choppier there but a rally coming september october that's now if we look at my dow cycle update this is where we are notice we've had low here low here we're coming into a low here i think we're going to see a year-end rally in the dow and that's positive so actually what we've seen is the dow has gotten very oversold while rest the markets haven't so there's an opportunity here for the upside in that [00:04:25] Grayson Rose: market hey guys it's grayson rose here i hope you're enjoying this video from the legendary trading champion larry williams now i just wanted to take a quick second to remind you that larry has introduced his custom indicators the indicators that he has created on his own as a trader on stock charts.com you have access to the same indicators that larry williams uses to trade and analyze the markets you can get those on stock charts the exciting news is we've recently rolled those out across both of our charting platforms so now sharp charts and acp whichever platform you use you can access the same pack of 10 indicators that larry williams has custom built for us really exciting stuff make sure you're leveling up your charting your trading your analysis with the same tools used by the legendary larry williams on stock charts visit stockcharts.com marketplace as long as you're signed into your stock charts account you can add those in just a couple of clicks so level up your trading level up your analysis just like larry williams with his stock trading starter pack now of course let's get [00:05:35] Speaker 1: back to the video with larry now when i'm going to be talking about rest of the presentation stuff i wrote back way back in the 1970s the secret selecting stocks first book ever wrote 1969 1970 something like that long time ago but you know what this stuff still works the nice thing about technical analysis cyclical analysis and fundamental analysis is that these things still do work and do hold up let me show you i'm going to show you how to use stock market indicators you know there's so many there's rsi there's percent r there's volume moving average all this stuff what do you do where do you look let's look the nice thing about stockcharts.com is they have so many indicators that some great indicators not just mine but other people have great indicators in there as well here's a couple that i like we're looking at ibm right now the blue line is a seasonal pattern for ibm you can see ibm usually start to rally up this time of the year that's a positive thing we can also look at money flow index this is when the large traders have been buying the market you can see what happens when they bought the markets led to rallies bought the market led to a rally well they've been buying in the market so we have a unique combination here a seasonal tendency to rally and smart money or professionals been buying ibm that's positive so i then like to bring in my cyclical analysis i'm using timing solutions for this and this is the cycle way that ibm is in right here right now it should start to rally in fact 72 percent of the time going way back in ibm 20 30 years it has rallied at this time of the year with a little over 70 probability of a rally is a perfect no you can see the last time was 2023 the low came a little bit later but yes we got the rally we looked before in 2019 there was a rally time yeah good rally and 2016 wall out that was just a perfect one so we don't know if we get the perfect one this year or we get one like this but we know there's a strong seasonal tendency for ibm to rally in fact i first wrote about this over 30 years ago that ibm usually rallies at this time of the year so how do you address that i'm not a put call guy it's a little bit over my head but you could buy a call you could write a put or you could just be outright along the stock another stock that looks to me like it has an upside here the broadcom avgo is a symbol it's rallied 88 of the time from october into the first of the year so we know cycling cyclically speaking we have a strong tendency rally but here's the bigger question is that backed up by anything we can see in the past what the cycle has done that was uh 2025 nice rally here was uh 2024 same rally again so is it backed up with anything well yes it is here's the seasonal pattern in blue yeah seasonal agrees with cycles nice my most unique indicator i've ever developed is my evaluation major this shows when the stock is undervalued this is broadcom what it's undervalued over here you can see over here it's undervalued it's undervalued and just before april this year the big rally and it's undervalued now so we have a combination of ingredients undervalued market cycle say up seasonal say up and finally we can look at my money flow index and see what happens when these large traders have been buying professional traders have been buying well we've rallied in this market and they've been buying the stock now so we have like a perfect storm if you will of a combination of things here it's not just cycles like cycles have a purpose they tell us when something should happen but the beauty of stock charts that shows us when should happen is should it happen now because there's been professional buying it is undervalued there's a seasonal pattern so that's how i like to combine all these indicators together which is what i wrote about way back in that 1970 book by the way the book is i know without a print but the cheapest copies usually on ebay by the way and there's a whole lot of new things since that book so the book is a bit dated maybe it's a collector's item but in terms of right here right now well hey guys come on right here right now uh i do have my indicators and stock charts i know most of you have them the thing is you can go to sharp charts uh and that's already included you might want to check that out now there's a lot of indicators and stock charts as i said there's a lot of really brilliant people i like mine of course because you know my kids are the best kids in the block too the ones i use the most of course as well but you need to find the tools that you understand that work for you those are the tools you need well let's look at some more stocks here's the big candy company mdlz well usually we rally at halloween time a lot of sugar is sold like christmas we get into a lot of sugar a lot of candy is sold and typically this rough stock is rallied from now until the end of the year that's interesting and we can see in the past there was a 2023 rally off 2025 we didn't get the rally did we 2022 we got a really nice rally so it usually happens but it's not a hundred percent it's 75 so how can we change those odds how can we improve upon that we can prove upon that by looking at the fundamental conditions let's look at the indicators and say are we bullish or bearish here's another example rocket lab rocket lab has rallied 80 percent of the time from the middle of october into the end of the year now this is an interesting stock to me because motley fools has been pumping the heck out of this stock they have made some brilliant stock selections in the past so oh here's a stock that has some really good fundamentals going for it it's been tipped quite a bit by motley fool and then we can say oh we had a seasonal pattern we see what happened last year in the seasonal pattern but where is it right now so if we look at stock charts indicators oh seasonal patterns the upside we see the money flow index we've been a lot of professional buying in this market and we're undervalued as we were back here we're undervalued we're undervalued over here we're undervalued back here we had professional buying and undervalued professional buying and undervalued to see how it works this stuff all comes together and combines into a package if you will i don't think that's enough to just look at a moving average or rsi or percent r or whatever uh trading is risky guys and girls come on you know that so we want to stack the deck as much as we can so i'm not a one indicator guy i know that some people want just one indicator uh red arrow sell green arrow buy well markets are not that simple so the best way i know we're going about that is combining these things together and then isolating because not all stocks are set up at the same time as you've seen a lot of art i'm just showing the ones that are set up now here's nike this one really intrigued me of university oregon graduate right went to school with phil knight oh wow the stock had been in a big decline i'm a runner i run in nike shoes i don't like to buy a lot of them because they've been such a way out there a company woke company but i'm a trader too so look at where we are in this stock first of all my pinch punch indicators in our device area that was here the last time was over here and the last time over here nice rallies for a quarter of a year if we look at the accumulation of the market we've seen a good accumulation by professionals here we saw it back here but we weren't in the perfect buy area either we saw it here back here we saw a lot of professional buying and we had the pinch punch indicator as we did back here see no patterns mixed right now i really like this advisory sentiment all the advice were really bullish back here about 95 of them and that was when the market started to come down i love really love and big downtrend to sell every time that the advisors get very bullish on the market you can see when they get very bullish in the market the markets come down it's not quite as effective in a big down market when they get very bearish but when they stay bearish for a long time i think we're getting close to a low in nike so it's one of the best value stocks in the dow now as well if i look at price sales ratio pe ratio so it's getting set up a lot and it's really helpful to see that with our indicators question is where are we in the cycle and here's the cycle makes the timing solutions in nike 77 of the time from the end of october into march the stock is rallied so wow looks like we have another of these situations set up uh we're not buying nike just because there's been a downtrend not buying it just because it's one of the weakest stocks in the dow or because nobody else wants to buy it there's a combination of reasons to buy the stock and i think that's really what makes for successful stock investing you want to have a bunch of things going on and and you can do that it used to be so hard when i wrote that book in the 1970s well just paper charts and it took you know i had one guy who did nothing every day but run numbers um and we didn't have electronic calculators in either that's all done by hand so now we can instantly access information and see okay we're in a cycle wave uh we see we've seen a good professional buying coming in on markets under accumulation we have a pinch punch we see advisor negative that's how we can stack the deck in our favor now this is the last time we saw in 2023 that wave in nike uh it wasn't so good eventually that we could get the rally in the stock here was 2020 all like bingo right on right so nothing is perfect in this market cycles people think that cycles are perfect apart from it there are general roadmap prices usually follow they follow the best if the conditions are set up for that cycle rally in the marketplace here's another stock i like home depot oh my gosh look at this seasonal pattern we see that and see in the stock charts just to go up i should point out my seasonal pattern in stocktrust.com does not look like anybody else's seal pattern because i made a mistake when i wrote the first book ever on seasonal patterns in the commodity market way back in the 1970s because we use the same seasonal pattern using now all the data going back in time we use that to make the seasonal pattern for now and for 30 years ago and that's a big error so my seasonal pattern uses data just up to now so if we went back to say 10 years ago we would only use data from 10 years back everybody else's and i mean everybody's right now in the seasonal patterns use all the data here to show the seasonal pattern 10 years ago it's just really using out of sample data in my true seasonal that's why we call it true seasonal right there's no out of sample data so we see it generally we follow the seasonal pattern this year and we're getting the rally time for home depot and we want to see what's the money flow index oh look what happens when the money flow index shows they've been buying the market yeah especially at a seasonal low seasonal low they've been buying the market and we tend to rally nice we look at the advisors they've been very bearish on home depot while the professionals have been buying the market so we say oh we have the conditions here it doesn't mean the market will rally instantly today this hour but we have the conditions in our favor to get this market to rally then we can start to look at cycles and so what does cycle suggest in this market well cycle suggested from now into march of next year we rallied 76 percent of the time you see that even going into 2000 oh i'm sorry this was our forecast excuse me this was the forecast i made at the first of the year in last december so what home depot should do it should have a rally right at the first of the year in may and then in september where we are now and that that rally is a 76 percent rally so the question is how to come out so remember this forecast was made a year ago buys at the first of the year in may and around the september october time frame well here's the buy at the first of the year there's the buy in may and this is where we are now again this is where we are now this is the may and this is the first of the year how did that work out there was first of the year there's a may here's where we are now but i think we have a great tendency for this market to rally because we have the cycle forecast and we have the conditions set up for home depot to rally so again we're using like a combination of things here to put together what should be a profitable trade the only thing you need left now is some type of a trend change in this market so i want to buy just because it's been down i would like to see getting above moving average getting above a trend line the formation of higher short-term lows or whatever entry techniques you have but is it set up yeah it's set up so here's nvidia this is our 2026 forecast as well you saw that we thought nvidia would have a rally from about in the middle of february into october with a nice buy point in july and a march buy point that was what we forecast a year over a year ago and there was a rally that we saw and the july august rally there's the july august rally there's the march rally and the upper trend of the market uptrend of the market there's a march and there's the july august buy period so cycles can be very helpful in showing us the general roadmap or path the market will take but i don't want to use cycles alone i want to back them up with something and that's the beauty of stock charts you can instantly access anybody's indicators to help you set up your trade in the marketplace so here's my update on nvidia for those that are interested we see that red is a shorter term cycle well they're following kind of the seasonal path we saw in october november we expect the market to come down and that's exactly where we are now a little bit more rally in here but some weakness coming into the end of the year and then around the first year cyclical studies suggest we should move back to the upside so some bias here but probably not as runaway of a market as as others would hope or want or even suspect because we're now running the area of cyclical tops versus cyclical lows and what a difference those cyclical lows are right they see how that works then if we look at the current conditions of the market we see the seasonal pattern also starts to come down about now and the advisors have been really bullish on this market eighty percent of them were bullish over here they were very bullish here ninety five percent were bullish over here we had ninety five percent bullish here a hundred percent bullish this week so this isn't a perfectly set up market you think wow the market's going to rally in video will rally well like i said earlier it's a stock market and it's a market of stocks so you kind of want to put all these things together okay here's one more stock that interests me at dick's sporting goods store i think i've been in the store one time know very little bit about them but i see there's been a lot of insider buying so notice in one stock i said whoa motley fools good record they've been heavily touting the stock here's another one there's been a lot of insider buying so i'm still looking for some condition to set up these trades in the marketplace then i can look at something like my pinch punch index buy zone buy zone buy zone oh yeah we just entered the buy zone so i have several things going on that i like about this that i have insider buying the inside have been buying a lot of stocks a couple three half a million dollars or more as i recall and we're getting our pinch punch index in the buy zone so it all starts to add up then i can bring encyclical studies oh look at that we usually rally about now there was a year ago it was right over here we had our rally here goes over there we had our rally so we then start to get a combination of these things uh clicking away for us in the market so we can kind of add everything together um and that's what i think is the beauty of today's technology uh you can go into ai you can ask what stocks have been insider buying you can go to stock charts.com and then you can put all this stuff together so i hope this has been a good learning lesson for you about how to put up how to select individual stocks and put together a strategy most people just don't have a strategy for the markets they just they read about a stock and they buy it they have no sense of timing so the the big clues of the market as i see it is you must have something that selects these stocks to have a good idea that they will rally because of some conditions it might be motley fool it might be insider buying it could be your brother-in-law works or it could be whatever but there's a condition there then you can bring in timing tools and tools that suggest yes in fact there is buying going on in this marketplace to see me present and again they can be from other people as well but you get the idea of how to put all this stuff together that's how i think you can make your life more successful hopefully more profitable as a stock trader or investor so my bottom line view here is i think we're going to see stocks rally and to end the rest this year and i'll probably do a forecast report maybe in december for stockcharts.com about what i see coming in 2027. no bear market yet but there is one out there i'm certain coming i talked to my wife louise about that yesterday but there's one coming but not quite here yet so with that i'd like to say class is over you can get back to trading and uh hope i give you some insights you can use in the market so until next time i'd like to thank stockcharts.com uh for allowing me to do this it's really privileged to be here i hope you learned a little bit from me i certainly don't have all the answers in this business but i got some insights that might help you so with that i'd like to close wishing you all happy halloween good luck and good trading