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Charts suggest the market will bottom in the coming weeks followed by a rally, Cramer says

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CNBC’s Jim Cramer said on Tuesday that stocks could bottom later this month and present investors with an opportunity to add to their portfolios.

“The charts, as interpreted by Larry Williams, suggest that the bear market is more or less … toast and, even if the current rally stalls, he’s predicting a big move either toward the end of this month or the beginning of November,” Cramer said.

Stocks gained on Tuesday following the August job openings report that indicated that the labor market is cooling, continuing the rally from the prior trading session.

Cramer said that Williams wouldn’t be surprised if the current rally fizzles out, but he still believes there’ll be a meaningful bottom near the end of the month, followed by a rally through election day, November 8.

“In other words, he thinks you should be prepared for a terrific buying opportunity, even if the current move gets repealed,” Cramer said.

To explain Williams’ analysis, he first examined the chart of the S&P 500 futures, in black. The chart also has what Williams calls the true seasonal pattern, in blue.

The pattern is based on the historical action at any given point in the year, and Williams notes that the market tends to bottom in mid-to-late October and then leads into 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 the S&P does, which means there should be a tremendous buying opportunity, he said.

For more analysis, watch Cramer’s full explanation below.

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