CNBC’s Jim Cramer warned investors on Monday to prepare for market turbulence by consolidating their portfolios.
“The charts, as interpreted by Carolyn Boroden, suggest the incredible rally in the S&P 500 may be running out of steam,” he said, adding, “It’s not necessarily saying we’re headed for a steep decline. short term, but you might want to tug your horns for the next few weeks.”
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Shares fell on Monday as investors took profits after the stock market’s strong start to the year. The S&P 500 is up more than 7% this year.
Cramer first explained that Boroden measures a stock or index’s past swings and determines key levels by running them through Fibonacci ratios, which technicians use to spot patterns that can signal when a stock or another title could change direction.
A cluster of clustered Fibonacci sync cycles is a sign that “something big” could be coming, he added. To explain Boroden’s analysis of the S&P 500, Cramer looked at the index’s weekly chart dating back to July 2021.
She sees six Fibonacci cycles coming due this week, meaning the chances of a bearish reversal are higher than she would like, according to Cramer. He added that there are three more sync cycles due towards the end of the month, in the week ending February 24.
“Boroden also says that when you look at the daily chart, you have similar timing cycles that are forecasting the same…significant pullback,” Cramer said.
He said that while these signs don’t guarantee a turnaround, Boroden thinks investors should prepare for the possibility that February will be a tough month for the market.
“She recommends watching for any sell signals so you can call the book and protect your profits,” he said.
For more analysis, watch Cramer’s full explanation below.
