Charts Show S&P 500 Investors Fall Is Coming

CNBC’s Jim Cramer on Monday warned investors to brace for market turbulence by consolidating their portfolios.

“Charts interpreted by Carolyn Boroden suggest that the incredible S&P 500 rally may be fizzling out,” he said, adding: “She’s not necessarily saying we’re heading for a brutal short-term drop, but you might want to work on your horns during the next few weeks.”

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Shares fell on Monday as investors took profits after a strong start to the year in the stock market. The S&P 500 is up more than 7% this year.

Cramer first explained that Boroden measures past fluctuations in a stock or index and identifies key levels by running them through Fibonacci ratios, which technicians use to identify patterns that could signal when a stock or other security might change direction.

A cluster of Fibonacci time cycles clustered together is a sign that “something big” could be happening, he added. To explain Boroden’s analysis of the S&P 500, Cramer studied the index’s weekly chart starting in July 2021.

There will be six Fibonacci time cycles this week, Kramer said, meaning a bearish reversal is more likely than she would like. He added that towards the end of the month, in the week ending February 24, three more time cycles are expected.

“Boroden also says that when you look at the daily chart, you see similar time cycles that predict the same thing… a meaningful pullback,” Cramer said.

He said that while these signs do not guarantee a reversal, Boroden believes investors should prepare for what could be a tough month for the market in February.

“She recommends keeping an eye on any sell signals so you can call the registry and protect your profits,” he said.

For a more detailed analysis, see Cramer’s full explanation below.