Charts counsel traders ought to brace themselves for declines within the S&P 500, Cramer says

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

“The charts, as interpreted by Carolyn Boroden, counsel that the unimaginable rally within the S&P 500 is perhaps working out of steam,” he mentioned, including, “She’s not essentially saying we’re headed for a brutal near-term decline, however you may wish to pull in your horns for the following few weeks.”

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Shares fell on Monday as traders took income after the inventory market’s robust begin to the yr. The S&P 500 is up greater than 7% this yr.

Cramer first defined that Boroden measures previous swings in a inventory or index and determines key ranges by working them by means of Fibonacci ratios, which technicians use to identify patterns that may sign when a inventory or different safety might shift instructions. 

A cluster of Fibonacci timing cycles clustered collectively is an indication that “one thing huge” might occur, he added. To elucidate Boroden’s evaluation of the S&P 500, Cramer examined the weekly chart of the index going again to July 2021.

She sees six Fibonacci time cycles coming due on this week, which suggests the percentages of a bearish reversal are increased than she’d like, in accordance with Cramer. He added that there are three extra timing cycles coming due close to the top of the month, within the week ending on Feb. 24.

“Boroden additionally says that while you have a look at the every day chart, you’ve got bought related timing cycles which are forecasting the identical factor … a significant pullback,” Cramer mentioned.

He mentioned that whereas these indicators do not assure a reversal, Boroden does consider that traders ought to put together themselves for the likelihood that February may very well be a troublesome month for the market.

“She recommends looking forward to any promote indicators so you possibly can ring the register and shield your income,” he mentioned.

For extra evaluation, watch Cramer’s full rationalization beneath.