Showing posts with label Larry Williams. Show all posts
Showing posts with label Larry Williams. Show all posts

Thursday, October 1, 2026

My Forecast for the Rest of 2026 | Larry Williams

US equities face near-term downside pressure and range-bound volatility amid poor breadth. Deteriorating internals—seen in the divergence between a strong NASDAQ, moderately strong S&P 500, and weak Dow and Russell 2000—suggest capital is rotating from quality blue chips into speculation, a pattern that has historically preceded broader sell-offs.


A major synchronized cyclical low and buying opportunity across the S&P 500, NASDAQ, Dow, and Russell is projected around Tuesday, October 27, ahead of the US presidential election. At the trough, focus capital on the index showing the strongest relative strength and greatest resistance to selling pressure during the decline.

Reference:
  
S&P 500 October Performance in Midterm Election Years.
Oct 27 (Tue) opens the midterm stretch that runs through Nov 10 (Tue), 2026, up in 22 of 24
midterm years (91.67%, avg. +2.6%, med. +3.2%). Misses: 1930 (−12.6%) and 1994 (−0.3%).  

 DJIA.

Russell 2000. 
 
 NASDAQ.
Detrended seasonal cycles isolate short-term periodic signals by removing longer-term trends, preventing distortion and enabling precise measurement of amplitude and timing.
See also:

Friday, September 25, 2026

George Cole and the Discovery of Pivot Points for Day Trading | Toby Crabel

The daily support and resistance lattice that most day traders treat as folk knowledge was first set down in 1936 by George William Cole (1870–1937), though he rarely gets credit for it. Cole was the first author to publish the formula now called Classic or Floor Pivots. Toby Crabel himself uses these pivot levels—not as a standalone system, but as one layer in a larger map of reference points.

"Before the many books and derivations of pit trader's numbers, there was George Cole in 1936. He was the first author to write about the formula so many day traders use now, most of whom have no idea where it originated. I haven't seen any contemporary authors credit Cole for it. Fair enough, the method works well, and the numbers are good reference points for structure in the market. It’s worth knowing where they sit each day in whatever you're trading."

 Cole self-published Graphs and Their Application to Speculation (a sequel to his 1928
book Successful Speculation: A Business) the year before he died, and Donald Mack
reprinted it
in 1998
in the Financial Times / Pitman Traders' Masterclass series.

Cole was not creating a simple day-trading cheat sheet. He wanted speculation to operate like a profession: charts as a visual map of mass psychology, a "law of occurrence or recurrence" in commodity prices, and human judgment required to pull the facts together. That is 1930s technical analysis in the Wyckoff family—slow, pictorial, and commodity-first. On subsequent literature, Crabel is blunt, and he names names:

"Almost all short-term traders have explored these numbers. Larry Williams called them his own. John Hill, Fisher, and Ochoa each added something to them. Carter and Person use them too. I saw traders on the floor in the '80s carrying their "Green Sheets" into the pit, and these numbers were the dominant feature on them. It’s safe to say most traders know about them and have built systems around them, so it pays to know where they sit if you want a read on the market’s mind throughout the day."⁠

These details matter. By the 1980s, the formula was no longer just a book idea; it had become pit infrastructure.

»
 Huh! that fellow is a 'chart trader.'
« 
 
Two Different "Pivots," Often Smashed Together
► Structural and Swing Pivots: A high with lower highs on both sides; a low with higher lows on both sides. Livermore called turning points "pivotal points" and split them into reversal versus continuation. Larry Williams later said he first called those short-term turns "ringed" highs and lows "in deference to the work done in the 1930s by Henry Wheeler Chase." That is swing structure, not a closed-form projection.
► Calculated Floor Levels: Yesterday's high, low, and close, printed into today's map before the open.
 

This is what Crabel means by Cole numbers (15-minute E-mini NASDAQ-100 of January 29, 2024): "R4 to S4 including the pivot (p), are all Cole numbers. I-1 hi and I-1 lo are yesterday's high and low. The two-day high (2 day hi), the all-time high (ath), and swing low (1 day sw lo) are also an important part of market structure."⁠ 

John Person's lineage credits Chase with the formula and Williams with its 1979 revival. The honest history involves two 1930s names, an unread reprint, a popularizer, and a floor practice that was already regarded as "secret numbers" when Person walked onto the CBOT. Crabel is likely right that Cole printed the arithmetic first. Person is likely right that the pits treated it as inherited craft. Neither invented the market’s habit of defending yesterday’s range.

The Formula Without Mysticism 
   Let H, L, C be the prior session's high, low, and close.
 
R4 and S4 are further range multiples, which Crabel plots. PP is the typical price (High + Low + Close / 3). R1 and S1 reflect the opposite extreme through that typical price, while R2 and S2 add or subtract the full prior range. Variants exist simply because people keep reweighting those same three numbers: Woodie doubles the close; Fibonacci stacks 0.382/0.618/1.00 of the range off the Pivot Point; Camarilla builds tight fade and breakout rails off the close; DeMark flips the calculation depending on whether the prior bar closed above or below its open. None of this is new physics. It is a daily map printed from a finished bar. 
 
How Crabel Uses the Numbers
He does not treat Cole levels as a system in themselves. He views them as a "predetermined" framework that sits next to a "dynamic" one:

"These are all predetermined price levels. Once the market opens, there are dynamic reference points to factor in too, and I cover those elsewhere. [...] Price will often poke through a high or low before resuming trend, so the action around the previous day's high and low matters."⁠

That last sentence is the core operational rule. The Cole grid provides the scaffolding; the prior high and low are the live walls. A poke-and-fail through yesterday's extreme, in Crabel's framing, tells you far more than a simple tap of R2.

The dynamic half of the map is the work Crabel is known for. In the 1988 Stocks & Commodities series that became his 1990 book, he defined the open itself as the other reference point of the day:

"Opening range breakout is one of the most important indicators of daily market direction that a trader can utilize. An opening range breakout (ORB) is a trade taken at a predetermined amount above or below the opening range. When the predetermined amount (the "stretch") is computed, a buy stop is placed that amount above the high of the opening range and a sell stop is placed the same amount below the low of the opening range. The first stop that is traded is the position and the other stop is a protective stop."⁠

He was already distinguishing rare trend days from ordinary rotation:

"Early entry is defined as a large price movement in one direction within the first five minutes after the open of the daily session. A study of early entry is essentially a study of price action, and the type of price action that takes place on early entry shows that participants are urgent about entering the market. It is a distinct recognition of either a profitable or dangerous situation. [...] It should be noted that directional moves of this nature are relatively rare and may occur only 10% of the time. Most days (70% to 80%), prices exhibit rotation or choppy action and the first five to 10 minutes of trading are sluggish and directionless without a clear movement away from the opening range.⁠"

The hinge between those two day-types is the principle that still sits under NR4, NR7, inside days, and two-bar and three-bar narrow range:

"The market having a specific nature is constantly changing from a period of movement to a period of rest and back to a period of movement."

 
That is the Principle of Contraction/Expansion. Cole numbers do not tell you which regime you are in; compression plus a move off the open does. Crabel reduced that entire visual tradition to two forces:

"My observations of markets through visual displays of data have led me to a simple conclusion: there are two primary forces at work. One is momentum, which includes the opening range breakout (ORB). The other is mean reversion, which at times can even involve trading in the opposite direction of the ORB. This has always been a useful way to think about markets. But over time, I have come to appreciate that there are many nuances and additional conceptual frameworks that continue to refine this view."⁠

Cole's grid is useful in both regimes. On a rotation day, it marks the likely fade rails. On a momentum day, it marks where the move should pause or accelerate. It does not choose the regime for you.

 
What Changed: The Open Stopped Being the Open
The Cole numbers survived the death of the pit because they do not depend on a clean open. ORB did. Crabel has been explicit about that at length, and the long version is the right one:

"⁠Where's the open? For God's sake. I mean there's so much volume in the 24-hour sessions it's impossible to determine what the open is. So the wonderful thing about open range breakout—back in the day when there were just primary session, domestic session trading—was it was the most vital piece of information, the reference point that you could have. [...] The real problem is where is the reference point? Where the open was a great reference point, but now what other reference points are there in the markets? One is the close of the previous day and the movement off of that."⁠⁠

He has also been careful not to claim invention of the open as a tool—"I didn't invent it"—and to note that Larry Williams was already working the same ground, and was not pleased to see it in print.
 
S&P 500 vs. Daily, Weekly, Monthly, and Quarterly Pivot Levels.
 
What Crabel does claim is the research program: find where order flow concentrates, then trade the imbalance. In the early 1990s, that meant two markers. Now it means a crowd of them:

"⁠In the early nineties I used ORB as a primary, or previous day’s high or low, as a reference point for marking and entering trades. Now we probably have 10 or 15 or maybe even 20 different reference points that exist in any market and different ways of navigating that. [...] The closing of the previous day tends to be much more important now than it ever was.⁠"⁠

Reading the Cole essay against that interview and the layout of Crabel's January 29, 2024 chart, the takeaway becomes obvious. R4 and S4 are the old predetermined lattice. The prior high and low, two-day high, all-time high, and swing low are the reference points that still carry energy now that the open is no longer a single moment.

 
What is Solid, What is Soft
► Solid: The levels are objective and available before the session begins. They establish a sensible bias rule: lean long above PP, lean short below PP, and treat R1 and S1 as the first places the auction should hesitate. Prior-day highs and lows are usually respected more than outer projections because they are actual traded extremes rather than mathematical reflections. Crabel's poke-through-and-fail observation around those extremes remains one of the cleanest intraday tells in trading literature. The green sheets existed because the numbers were shared—and shared levels become structural market points even after their original rationale is forgotten.
►
Soft: The formula does not account for overnight gaps or a Sunday FX open. "Yesterday" is no longer a clean object in 24-hour markets. Outer levels are often wallpaper. Buying S1 and selling R1 as a standalone system is how the method earns its bad name. The edge, when there is one, is confluence: a Cole level + prior high and low + opening range or prior close + the actual swing right in front of you.

That is also why Crabel's credit-where-due note is more than antiquarianism. Cole printed a portable map. The pits made it a common language. Williams, Hill, Fisher, Ochoa, Carter, and Person turned it into product. Camarilla, Woodie, Fibonacci, and DeMark are variants. Crabel's own contribution is the frame around the map: predetermined levels first, then the day’s dynamic reference points, then a decision about whether the session is momentum or mean reversion.

Ochoa's CPR, Cole's Floor/Classic or Traditional, Woodie, DeMark, Fibonacci, Scott's Camarilla.

However, do not give the pivots' arithmetic more metaphysics than it earns. It is a prior-day typical price and a set of reflections. It works when the market is still negotiating yesterday's range. It is noise when the market has already decided today is a different day. The skill is telling those two conditions apart—and that skill, as Toby Crabel keeps repeating, is not in the formula. It is in the structure you put around it.

Reference:
 
Why pivot points work?
Self-fulfilling prophecy.
 Aha!
 
See also:

Saturday, August 22, 2026

Small Ranges Beget Large Ranges | Larry Williams

Let's have a look at the Key High-Low Reversal Pattern: A market is said to top when it makes a higher high and a higher low but closes down for the day or week. At a bottom, it makes a lower low and a lower high but closes up.
 
But does this "Textbook" Reversal Pattern actually work?
 
Most technical analysis books describe this as a "classic reversal pattern." But when you examine actual charts, it doesn't consistently work that way. 
 
This can be in fact a dangerous pattern to rely on.
 
Major tops and bottoms rarely produce a key reversal. Instead, markets often top by closing near the high and bottom by closing near the low. Key reversal signals are relatively rare, and many fail. So be careful with them. What happens after the reversal may be more useful, particularly when the reversal fails. So, what does work?

Small ranges often precede large, explosive moves.
 
Markets tend to cycle from small ranges to large ranges. When we see a series of small ranges, we know that a significant move may be developing. The important point is that small ranges tell us something is coming, but not necessarily which direction. 

What are we waiting for? Small ranges.

The Average True Range (ATR) provides a useful way to identify small and large ranges. When the ATR is low, the market is often preparing for an explosive move. We don't know whether that move will be up or down, but we know volatility may be about to expand. Conversely, very high ranges often occur near market lows. Markets frequently decline on larger ranges and rally on smaller ranges.

Markets tend to decline on larger ranges and rally on smaller ranges.

Very low ranges can signal that an explosive move is approaching, while very high ranges can occur near selling extremes.
Small ranges therefore provide a useful setup, not a complete trading signal. You still need to consider trend, overbought/oversold conditions, and other indicators to determine direction. This requires patience. Most short-term traders struggle to wait for the right conditions. Jesse Livermore put it well: "There are times to speculate and times not to speculate." Short-term traders often want to trade constantly, but patience is essential. As Livermore said, "I permitted impatience to outmaneuver good judgment." Think of trading like a card game: you have to wait for the right cards.

Tuesday, May 26, 2026

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:
 
See also: 
 
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.