My Summer Pullback Forecast: 15% Drawdown Expected Before Final Melt-Up

by Graham Lindman | May 13, 2026

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Many traders have been feeling that familiar sense of FOMO lately. Some feel like they missed the latest surge, but it’s important to understand that despite the market sitting near all-time highs, sentiment isn’t stretched.

We’re not seeing the kind of extreme greed that typically signals a top, which means there can still be room to run. At the same time, breadth hasn’t kept up with the indices, with large-cap tech doing most of the heavy lifting.

That simply means we need to stay selective and disciplined.

And even after a hot bull run like this, history shows that a dip doesn’t mean the party is over. Across past cycles, when markets have run this strong, only one instance failed to continue higher over the following year, and that was during the dot-com collapse. Roughly 92% of the time, the market pushed higher afterward, often doubling or more the S&P 500’s return.

A correction is normal, not a sign of a peak.

The Historical Pattern Points to Summer Weakness

Seasonal and historical patterns continue to line up. The average drawdown in the first six months of a new Fed chair is around 15%, which is larger than the pullback we saw around the geopolitical scare earlier this year.

When you map the current market against the late-90s tech cycle, the similarities are hard to ignore: A strong October-February surge, a pullback in the spring, then a sharp recovery. That same template suggests a cooling period ahead.

Our seasonal model reinforces this. Markets tend to remain strong into the next two or three weeks, with strength typically carrying into the following six weeks. After that, this pattern usually transitions into a downtrend, and the model points directly to a June-July window as the most likely period for that pullback.

This aligns with the broader expectation of a 15% drawdown in the S&P 500 , with higher-beta areas like the Nasdaq 100 (QQQ) potentially falling 20% or more. That difference in volatility also creates a difference in opportunity, with sharper declines setting up sharper rebounds.

Positioning for the Final Melt-Up Phase

This is why patience matters here. A correction of this scale doesn’t signal the end of a bull market. In fact, it may open the door to the final melt-up phase. The next major buying opportunity is likely weeks away, not months, and rushing to chase late gains now isn’t necessary.

You can still profit, but it’s not the moment to overextend. Waiting for that clearer entry could be far more rewarding.

While the medium-term setup is bullish, it’s important to acknowledge that valuations are high. That may mute long-term returns and major drawdowns later in the decade are still possible. Even if the next 12 to 18 months offer strong gains, these bigger risks remain in the background.

The coming correction and eventual rebound won’t be smooth. Volatility is almost guaranteed, and navigating it will require an iron gut and a firm commitment to your plan.

Stay disciplined, stay patient, and prepare for what could be an exceptional summer opportunity.

Graham Lindman
Graham Lindman Trading

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