Charts point to upcoming declines for S&P 500 investors

CNBC’s Jim Cramer on Monday warned investors to prepare for the coming market turmoil by consolidating their portfolios.

“Charts interpreted by Carolyn Boroden suggest the S&P 500’s incredible rally may be running out of steam,” he said, adding, “It’s not necessarily saying we’re headed for a brutal near-term decline, but you might want to get into draw your horns in for the next few weeks.”

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Shares fell on Monday as investors took profits after stock markets got off to a strong start to the year. The S&P 500 is up more than 7% this year.

Cramer first explained that Boroden measures past swings in a stock or index and determines key levels by running them through Fibonacci ratios, which technicians use to spot patterns that can signal when a stock or other security is dying could change direction.

A cluster of Fibonacci timing cycles clustered together is a sign that “something big” may be happening, he added. To explain Boroden’s analysis of the S&P 500, Cramer examined the index’s weekly chart since July 2021.

She sees six Fibonacci time cycles due this week, which means the odds of a bearish reversal are higher than she’d like, Cramer says. He added that three more timing cycles are due towards the end of the month, in the week ending February 24th.

“Boroden also says if you look at the daily chart you have similar timing cycles predicting the same thing…a significant pullback,” Cramer said.

He said that while these signs do not guarantee a reversal, Boroden believes investors should prepare for the possibility that February could be a difficult month for the market.

“She recommends watching for sell signals so you can call the register and protect your profits,” he said.

For more analysis, see Cramer’s full statement below.