Jim Cramer Warns S&P 500 Could Upon a "Make-or-Break Moment” in the Short Term
On Wednesday, CNBC host Jim Cramer warned that the S&P 500 might be on the verge of a "make-or-break moment,” according to CNBC.
Cramer came to this conclusion after reviewing a chart analysis from FibonacciQueen.com’s Carolyn Boroden, a market technician who has a price target of 3,720 for the index. However, Boroden is concerned about the near future of the index.
“If it can’t break through last week’s highs at 3,100,” Cramer said, “Boroden thinks you need to prepare for pain because the near future could get ugly.”
In May, Boroden projected that the market was rallying and set a price target of 3,280. The S&P 500 reached 3,232 in June before falling 7 percent in three trading days. Boroden believes that the index won't rally to her 3,720 price target unless it can break through 3,280. “Given that we failed to break through that resistance, she’s worried about potential downside here,” Cramer said.
The daily S&P 500 chart is also not promising fortune in the near short-term. Despite the S&P 500 above its 50-day and 200-day moving averages, the 13-day exponential moving average is currenlty above the 5-day, a singal of decreasing momentum. However, Cramer is not recommending investors sell. Once the 5-day and 13-day averages invert, the market will enter rally mode.
“If the S&P can do that and then take out last week’s highs, up about 40 points from here, then Boroden thinks we can resume the recent rally,” Cramer said. “In that case, she says, the S&P could tack on another 200 to 300 points from these levels.”