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.
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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.
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