NASDAQ, DJIA & Bonds: Next Bullish Wave May Be Starting | Larry Williams

Let's start with the three core market tools—often misunderstood and rarely used together effectively: 

 

■ Fundamentals determine value: Markets ultimately move for fundamental reasons, and value is rewarded over

    time—not necessarily today, this month, or even this year. A value-driven framework is indispensable. 

■ Technicals define the present: They reveal current market conditions—trend, momentum, overbought or

    oversold states.  

■ Cycles provide the edge: They project direction and timing, identifying when opportunities are most likely to

    emerge.

The process is straightforward: What has value? Where are we now? Where are we going? You need all three—none is sufficient on its own. We begin with cycles, specifically the NASDAQ, which has exhibited structural strength since 2009.

Bullish NASDAQ Cycle Analysis

Market cycles consist of recurring lows, rallies, and declines, but not all waves carry equal weight. Some phases are structurally stronger—and we are currently in one.

 

NASDAQ: In a dominant bullish cycle wave with typical June strength → August pause → higher continuation;

bias remains up, buy pullbacks.

 

A comparable wave (3.5-Year, 41-Month, or Kitchin Cycle) in 2016 produced a sustained rally. The current configuration is similar. Since 2023, the NASDAQ has been in a pronounced bullish cycle. While my primary focus is typically the NASDAQ, recent instability in the Dow has increased its relative importance this year. Current cycle positioning suggests the early stages of another strong upward phase—historically associated with meaningful advances.

NASDAQ Could Rally Again: Historically, this cycle turns higher in June roughly 90% of the time.

 

Why the NASDAQ Could Rally Again: Historically, this cycle turns higher in June roughly 90% of the time, experiences a modest pullback in August, and then continues upward. That pattern implies a constructive setup.

Markets do not require declines to rally. They often consolidate sideways before advancing—a behavior repeatedly observed. While many investors wait for pullbacks, the absence of weakness does not negate bullish conditions. My 2026 forecast anticipated higher prices and emphasized buying pullbacks—not waiting for a breakdown that may never materialize.

Dow Jones "Explosive Wave" Pattern 

The Dow is forming a recurring "explosive wave" structure: consolidation followed by a sharp advance. This sequence—sideways movement transitioning into a rapid rally—has repeated multiple times. 

 

DJIA: Sideways consolidation within "explosive wave" structure likely resolving into sharp upside move late June–August.

 

The current phase is a consolidation with a bullish bias. Historically, such setups resolve into strong moves, often beginning between late June and August. This pattern is relevant for longer-term positioning.

The expected mid-June low should be understood as a cycle low in the NASDAQ and DJIA—a tactical buying opportunity, not necessarily the absolute price bottom. The broader outlook remains intact: 2026 is a bull market year.

Inflation, as anticipated, has moved higher and remains closely linked to bond market dynamics. The longer-term trajectory still points toward declining interest rates into the early 2030s. This brings us to bonds.

Bond Market Setup & Seasonality

Bond seasonality is currently in a bullish phase, historically associated with rallies. Cycle analysis aligns with this timing, reinforcing the setup. The Money Flow Index indicates institutional accumulation—an early and important signal.

 

Bonds: Seasonal + cycle low with rising institutional accumulation signals an emerging rally; 

near-term dip is a tactical buy entry.

Institutional Positioning in Bonds: Professional money is rotating into bonds. Commitment of Traders data shows commercial participants holding their largest long position since 2023. Historically, markets tend to advance when large, informed participants accumulate. 

 

COT data shows commercial participants holding their largest long position since 2023. 

 

Combined with a seasonal low, a cycle low, and improving money flow, the evidence points to a high-probability buying zone.

 

Wait for short-term pullback, then enter in alignment with the broader cycle and seasonal trend.

 

Bond Market Strategy: On the daily timeframe, bonds are near a seasonal low with capital beginning to flow in. The tactical approach: wait for a short-term pullback, then enter in alignment with the broader cycle and seasonal trend. While the market has already begun to move higher, a near-term retracement would provide a more favorable entry.

Stay the course. There is no bear market. Despite persistent skepticism, the primary trend remains upward. The strategy is unchanged: buy pullbacks, not fear them. We are in a bull market.

Reference:

Larry Williams (May 26, 2026) - The Next Bullish Wave May Be Starting. (video)

 

See also: 

Larry Williams (February 19, 2026) - 2026 Market Update: Crude, NatGas, Metals, Stocks, Cocoa. 

Larry Wiliams (December 23, 2025) - 2026 Market Forecast: Cycles, Risks, and Opportunities.

David Hickson (May 18, 2026) - Hurst Cycles Update: SPX, NDX, ASX, DAX, NIFTY, Gold, Bitcoin.  

TPR (May 19, 2026) - Pre- and Post-Memorial Day Seasonal Patterns in US Stock Indexes. 

Jeffrey A. Hirsch (December 29, 2025) - 2026 Midterm Election Year Seasonal Patterns of US Indices.

 NDR (January 21, 2026) - 2026 S&P 500 Composite: Seasonal, Presidential & Decennial Cycles.

W.D. Gann (2025) - The 10-Year Cycle. 

 

 A New Fed Chair is not All Doom & Gloom.

Kevin Warsh is now Fed Chair, reviving fears that markets "test" new leadership—citing Bernanke (2007–09 crisis), Greenspan (1987 crash), and Volcker (late-1970s inflation). Yet history does not show leadership changes reliably trigger downturns. Context: since 1930, the S&P 500’s average annual drawdown is 16.1% (bearish extreme), its average best rally is 25.9% (bullish extreme), and mean annual return is 8.0%.

Post–Fed leadership changes, S&P 500 performance is generally not bearish: except at the 3-month horizon, advance rates exceed a 60% bullish threshold and average returns are positive. If Eugene Meyer (Great Depression) and Greenspan (1987) are excluded as likely timing outliers, results improve further: all intervals show higher average returns and win rates; at 1 year, the S&P 500 averages +12.7% and is higher 90% of the time.

S&P 500 Bear Outlook Intact: Q3 3.5-Year Hurst Cycle Low | Namzes

The big picture remains unchanged: I still expect a bear market, with a buyable 3.5-year Hurst cycle low in Q3 2026. The 20-week cycle low arrived on schedule—just one day after the ideal March 27 (Fri) window outlined in my 2026 forecast.

 Chart 1: The new 20-week cycle could run higher into late May. The current 40-day cycle is now about halfway through.

I didn’t expect new all-time highs—my plan was for a rejection at the golden pocket retracement. Instead, a mix of CTA driven mechanical buying and Trump playing the market like a violin produced the blow-off top I’d anticipated back in February. The market always finds a way to humble you. 

 

The current 40-day cycle is roughly halfway complete (Chart 1). Next week should clarify whether the rally has further upside or is topping out. In my base bear case, April 17 was flagged as a potential turning point, but so far there are no signs of buying pressure slowing. Options expiration (OPEX) often serves as a pivot—either on the day itself or shortly after.

 
From a Hurst cycle perspective, the S&P 500 may still have several percent of upside left. That said, I’m not chasing it. As in February, I’ve stepped aside—risk/reward isn’t compelling for my multi-month holding framework, especially with weekend headline risk in play.

Timing-wise, the next 40-day low is due around May 7 (Thu). That should provide clearer insight into structure—namely the depth of the pullback and the strength of the rebound into late May (Chart 2). This sequence would then feed into a larger decline toward a higher-degree summer low. Leading indicators continue to point to a more meaningful downside move in the weeks ahead, so I remain heavily in cash.

  

 Chart 2: Options expiration (OPEX) often acts as a pivot, either on the day itself or a few days after. 

Next 40-day low due around May 7 (Thu), followed by a rebound into late May.

 

Short-term models have triggered a buy signal. If you’re leaning bullish, the new 20-week cycle could extend into late May, including a typical retest of the May 40-day low. However, given the negative pressure from the dominant 3.5-year cycle, my base case is that this rally is a false breakout—likely forming another divergent top and unlikely to persist beyond April.

It’s extremely rare for a 40-week cycle (top panel, Chart 3) to undercut its prior low and still go on to make new highs. In S&P 500 history, I could identify only one comparable instance. The usual structure in such cases is an M-shaped pattern with a clear bearish bias, as highlighted by the arrows.

 

Chart 3: It’s rare for a 40-week cycle to undercut its low and still go on to make a new high.

Bottom panel shows 20-week cycle, expected to synchronize with the 40-week cycle around July. 

That’s exactly how I expected the current 20-week cycle to unfold. That said, we now need price action to confirm emerging bearish signals. A bullishly configured cycle could still extend into June. While models have triggered a buy signal, participation remains narrow and volume is light. In my view, a downside resolution over the next few weeks remains the highest-probability outcome—but it still requires confirmation. Cycles define the setup; price action and models provide the trigger. The bottom panel shows the 20-week cycle, which I expect to synchronize with the 40-week cycle around July.

To illustrate what typically happens after a 20-week cycle low when the 40-week cycle has already failed, we can look back at Q1 2022 (Chart 4). In January of that year, the price made a lower low, confirming that the 40-week cycle had failed and signaling the start of a larger-degree correction.

 

Chart 4: Typical outcome after a 20-week low when the 40-week cycle has already failed.

 

This was followed by a series of bounces that retraced some of the decline but failed to make new highs. The market then rolled over and established new lows. This pattern is typical behavior roughly 99% of the time.That’s why I’ll be watching closely to see whether the current breakout turns out to be a deviation that ultimately resolves to the downside over the next few weeks, especially with the longer 3.5-year cycle exerting downward pressure.

I'm watching for a potential Wyckoff upthrust after distribution (UTAD) to play out over the next few weeks (Chart 5). For the bulls, it's critical to keep any pullbacks shallow and hold above the 2026 opening price at SPY 685.71, as well as above the overall consolidation range. 

 

Chart 5: Watching for a potential Wyckoff UTAD to unfold in the coming weeks.

Doing so will help avoid the setup looking like a classic false breakout. I've also overlaid the 2022 bear market in yellow for reference, in case the bearish thesis unfolds and we see a similar structure develop.

Reference:
Namzes (April 17, 2025) - S&P 500 Bear Outlook Intact – Q3 3.5-Year Cycle Low.

See also:
Namzes (January 10, 2026) - 2026 Hurst Cycles Playbook for the S&P 500. 
Namzes (January 1, 2026) - 2026 US Stock Market Forecast: 25% Bear Market and Recovery.

Krasi (April 19, 2026) - This is a 4-year cycle high—don’t get too excited.

David Hickson (April 7, 2026) - Twenty-Week Cycle Trough Or Greater? (video)