CNBC’s Jim Cramer announced on Tuesday how he will approach the market should stocks enter a volatile period in the near future.
In response to analysis by Carolyn Boroden, a technician who runs FibonacciQueen.com and contributes to RealMoney.com, Cramer offered a strategy to weather a sell-off in the current environment.
If the S&P 500 Due to a short-term downtrend, Cramer advised the average investor to hold on to it and get rid of it. Those looking to get out of their holdings broke off Boroden’s sell trigger.
“Watch the S&P 5-day exponential moving average (blue line) and the 13-day exponential moving average with red line,” said Cramer.Bad money. “” If the 5-day mark is below 13, which indicates the momentum has turned against you, your cue is to get out of Dodge too. “
“Personally, I’d like to split the difference: maybe sell part of your position but keep something on the table, and that’s exactly what we’re doing with my non-profit trust,” he added. “The Trust sells some, but not all.”
In discussing Boroden’s Chart Insight and Fibonacci timing cycles, Cramer found that the market rose well past two price targets she set, 4,012 and 4,090. A temporary retreat of the S&P 500, which hasn’t traded below 4,100 in nearly three weeks, “wouldn’t surprise me in the least,” he said.
Boroden said the broad index could drop to the old resistance line at 4,012, or drop 4% from Tuesday’s close, he added. The next support level is around 3,725, which corresponds to a decrease of 11%.
Last week the S&P 500 fell 0.13% for a four-week winning streak.