UKTN’s Jim Cramer revealed on Tuesday how he is approaching the market, should stocks enter a volatile period in the near future.
Reacting to analysis from Carolyn Boroden, a technician who runs FibonacciQueen.com and contributes to RealMoney.com, Cramer came up with a strategy for surviving a sale in today’s environment.
If the S&P 500 is to experience a short-term downtrend, Cramer advised the average investor to hold on and get out of it. As for those looking to trade and get back in their holdings, he broke the Boroden sell trigger.
“Look at the S&P… 5-day exponential moving average (blue line) and its 13-day exponential moving average, red line,” Cramer said on “Mad Money”. “If the 5 days go under the 13th, indicating that the momentum has turned against you, that is also your signal to get out of Dodge.”
“Personally, I like to share the difference: sell part of your position, maybe, but keep something on the table, and that’s what we do with my charitable trust,” he added. “The trust sells some of it, but not all of it.”
While discussing the insight of Boroden’s charts and Fibonacci timing cycles, Cramer felt that the market had well exceeded the two price targets she set at 4,012 and 4,090. A temporary pullback in the S&P 500, which hasn’t traded below 4,100 in almost three weeks, “wouldn’t surprise me at all,” he said.
Boroden predicts the broad index could hit the old resistance cap at 4,012, down 4% from Tuesday’s close, he added. The next support floor is around 3,725 which would represent an 11% drop.
Last week, the S&P 500 fell 0.13%, breaking a four-week winning streak.