Larry Williams’ 2026 Market Forecast: Cycles, Risks, and Opportunities

Finance-Focused Summary (Larry Williams’ 2026 Market Forecast)

Tickers / Instruments / Assets Mentioned

• Stocks (examples named):
  • Nvidia (NVDA)
  • Dow Jones Industrial Average (DJIA) (index referenced as a framework for component performance)
  • Caterpillar (CAT)
  • Goldman Sachs (GS)
  • Johnson & Johnson (JNJ)
  • IBM
  • Bank of America (BAC)
• Indices / macro series:
  • U.S. yield curve (referenced via Fed/StockCharts and St. Louis Fed charting)
  • M2 money supply (U.S.)
• Surveys / sentiment measures:
  • University of Michigan sentiment survey
• Company/market framework concepts:
  • P/E ratios
  • Recession indicators
  • Tariffs / customs duties
  • Corporate tax receipts
• Futures mention:
  • “Actively traded future markets” (no specific futures tickers named)

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Key Macro / Market Claims & Numbers

Nvidia (NVDA) timing (cycle-based forecast)

• Expected pullback: into mid-February 2026
• Expected rally window: “good rally up into April”
• Mentions a longer-term cycle phase from mid-February into May
• Historical claim: NVDA historically rallied in this phase about 75% of the time

Valuation / P/E impact on expected returns

• Historical framework:
  • P/E ~10–15 → historical annual stock returns about 15–20%
  • P/E ~30+ → returns have been negative
• Valuation points cited:
  • ~22 “as of the day” (implies moderate gains)
  • A year ago: P/E ~27.2; “now” ~25.0
  • Estimated coming-year P/E: ~23
• Recommendation implication: expect moderate market gains (~5–8–10%)

Yield curve recession condition

• Claim: the system “doesn’t produce recessions” until the yield curve gets above 1
• Additional framing: yield curve is not near 1 → recession risk not “current”
• Shape call: current yield curve is described as up and therefore bullish

Inflation cycle

• Inflation expected to pick up
• Supportive “to a point,” but “very bad after a point”

Jobs / employment cycle

• Uses employment ratio (jobs as % of population) rather than raw job counts
• Claim: jobs cycle starts to pick up around mid-2026 into 2028
• Linkage: associated with bull markets

Sentiment-based buy signal (University of Michigan)

• Operational rule: a buy signal when the survey is below 60
• Notes it dipped below 60 “this year” and is currently below 60 as well
• Cites prior buy-signal periods: 2008, 2011, 2022

Market seasonality: “Years ending in six”

• Claim: ~85% odds that years ending in 6 close higher
• “Down years” in that pattern: only four times
• Mentions support that streaks can continue (e.g., 3 up years in a row), with limited predictive value

Money supply (M2) cycle

• Claim: money expansion cycles occur about every 6–7 years
• Historical alignment: lows/pickups coincide with bull markets
• 2026 suggestion: a next upswing in monetary growth (timing described as coming) → bullish bias (not “straight up” guarantees)

AI / leadership rotation warning

• Cites strongest Dow components for the year:
  • Caterpillar +64%
  • Goldman Sachs + (exact % not provided)
  • Johnson & Johnson, Nvidia mentioned as “up 30%” (exact % for JNJ/GS not provided)
  • Nvidia +30%
• Recommendation implication: don’t focus only on “hot” AI/Nvidia-type names
  • Mentions value/other winners too: CAT, JNJ, IBM

Corporate tax receipts & tariffs (political/macro bullish claim)

• Corporate income tax receipts: “skyrocketed”
  • Attributed to profitability and tax payments
• “Tariff shock”:
  • Tariffs/customs duties rose sharply; speaker says it’s almost double vs levels since 1960
• Bullish consideration: increased receipts can offset debt and help fund social/building programs if tariffs are maintained

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Explicit Recommendations / Cautions

• Don’t heed “Cassandras” or extreme pessimists “right here and right now.”
• Expect moderate gains in 2026 (not panic-driven drawdowns), grounded in:
  • P/E valuation logic
  • Yield curve recession framework
• Contrarian sentiment accumulation:
  • When University of Michigan sentiment is very bearish (<60), begin/accumulate stocks
• Avoid thematic overconcentration:
  • Don’t concentrate too heavily in one stock/theme group—diversify attention across broader market leaders and value names
• Inflation is conditional:
  • Supportive “to a point,” harmful “after a point”

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Methodology / Step-by-Step Framework

1) Valuation framework using P/E ratios

• Compare current P/E to historical zones:
  • 10–15 → historically strong returns (15–20%)
  • ~30+ → historically negative returns
• Use estimated forward P/E (~23) to justify moderate returns (~5–10%)

2) Yield curve recession test

• Recession “not expected until” the yield curve gets above 1
• Also assess yield curve direction/shape:
  • Up = bullish (down/flat referenced as precursors before declines)

3) Jobs/employment cycle approach

• Use employment ratio (jobs relative to population)
• Identify cyclical “turn dates” when the employment ratio improves
  • Target window: mid-2026 onward

4) Cycle/seasonality timing

• Edgar Lawrence Smith cycle:
  • about 3.5 years
  • uses historical out-of-sample cycle lows as “buy points”
• “Years ending in six” tendency:
  • stated 85% odds of higher closes

5) Sentiment contrarian signal

• University of Michigan sentiment:
  • treat below 60 as the operational buy trigger
• Sentiment used as a reflection of market behavior, but still applied via the threshold

6) Money supply (M2) correlation

• Track M2 expansion cycles (~6–7 years)
• Infer bullish bias when monetary growth turns up

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Performance Metrics Referenced

• Expected market returns (2026): ~5–8–10%
• NVDA tendency in cited cycle phase: rallies about ~75% of the time
• Stock performance examples:
  • CAT +64%
  • NVDA +30%
• Stated odds / timing:
  • ~85% that years ending in 6 close higher
  • ~65% chance: Bank of America (BAC) rally starting around August, with strength peaking around early October

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Disclosures / Disclaimers

• No explicit “not financial advice” disclaimer is shown in the provided subtitles text.
• The speaker encourages trading/investing using his methods, but no formal legal disclaimer appears in the excerpt shown.

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Presenters / Sources Mentioned

• Larry Williams (main speaker)
• StockCharts.com (platform sponsor/host)
  • Thanks mentioned: Chip Anderson and “the entire gang”
• Grayson (StockChartsTV host segment introduction)
• University of Michigan (sentiment survey source)
• Federal Reserve / St. Louis Fed (yield curve chart reference)
• iReallyTrade.com / we retrade.com (publisher of forecast report; links referenced in the text)