Cramer's 'Off the Charts' Checks Key Levels for S&P, Nasdaq

In Mad Money's technical analysis segment "Off the Charts" Monday, Jim Cramer revisited the S&P 500 analysis of Real Money Pro's Carolyn Boroden and also looked at the Nasdaq 100.

"It's the most bullish I've heard" Boroden," Cramer said.

The fundamentals "are all over the place," so it's a good time to look at stock technical analysis, he added.

Below is what Cramer had to say about the charts:

The last time we talked to Boroden, she talked about the SPX via the monthly chart and daily charts and told us that the market was vulnerable to more of a downside correction.

She told us that if the rally at that time was only corrective, that the decline should resume by the first week in February with the dates she was watching as Feb. 2-5. We did end up seeing an important high made on Feb. 1 and another shot to the downside.

As that decline started to unfold, she posted on Twitter on Feb. 11 and told us to watch for a tradable low due to the fact that she then had a cluster of Fibonacci time cycles that suggested this could occur. (You can go back to her Twitter feed on Feb. 11 and find these charts.)

 

She said she did not know if the market would make a low then, she just knew the Fibonacci cycles, along with some key price parameters, were suggesting that possibility.

She said the cycles on the daily chart were enough to call a possible low, but when she also looked at the weekly chart parameters she found an interesting confluence of time relationships that were suggesting to her the February low might be more important.

One of the main cycles was the 100% projection of the prior high-to-low swing of 14 weeks projected from the November 2015 high. Notice that the low on Feb. 11 was made 14 weeks down from this high, which is exactly the same as the prior larger swing of May 2015 to August 2015. The other cycles that came are illustrated on this next weekly chart.

She saw the confluence of seven Fibonacci time cycles that came due starting the week ended Feb. 5 and ending the week of Feb. 19. So, even though the daily charts are still hanging below the 200-simple moving average on the daily chart, she says there is a case for this low potentially being more important, and is watching to see if key resistance tests in this market can now be cleared on the upside to support this scenario.

You can see the shorter-term cycles that came in on the daily chart of SPX. One of the obvious timing factors illustrated on this chart is the fact that the decline into the Feb. 11 low lasted eight trading days. This was equal to one other prior declining swing of eight trading days and similar to another of nine trading days.

Boroden says the SPX has passed one test on the upside so far when it rallied beyond some shorter-term cycles for a high, but now a more important test is coming up in these next few sessions. On the next daily chart you can see that the recent rallies in this market have lasted anywhere from eight to 11 trading days off any new low. She says the rally off the recent low has been 10 trading days, which is similar to the others.

If the SPX can rally for more than about 12 trading days she says that would suggest at least a deeper upside correction and possibly even new highs beyond the May 2015 highs. Now, this is very different from what she was sharing at the end of January. She says that you have to continue to analyze the market as it unfolds.

We also asked her to take a look at the Nasdaq 100 this time.

 

She says that similar timing showed up on the daily chart of NDX. The dates of Feb. 11-14 stood out for a possible low. The NDX index low was actually made just prior to these dates on Feb. 8, though the futures contract made the low along with SPX on Feb. 11. When a colleague of mine suggested a possible head-and-shoulders bottom on this index, she could not dispute that possibility.

Bottom Line

Boroden thinks the Feb. 11 low in the SPX and recent low in NDX are pivotal. She says that even if we see a healthy pullback in the coming sessions off the current time resistance parameters, she wants to watch this pullback for long entries in the coming weeks. She says she is wrong as far as this analysis is concerned if the Feb. 11 low is breached.

She says it's important to take this market from one key technical decision to the next as no one really knows where this market is going. She just use the tools via the Italian mathematician to make her educated guesses.

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