Cramer: S&P in jeopardy, thanks to Greece?

After Monday's colossal beat down of the averages, Jim Cramer sees a lot of panic in the market as investors question where we could be headed and for how long.

This is exactly why the "Mad Money" host likes to turn to the charts to see what could be in store for the future, because they emotional component from trading to analyze the market from a quantitative angle.

To get a sneak peek at the future, Cramer turned to Carolyn Boroden, a technician, owner of FibonacciQueen.com and one of Cramer's colleagues at RealMoney.com, to get the inside scoop on where the S&P 500 could be headed.

Cramer last spoke with Boroden on June 9, and her research determined that the market was due for a nasty correction, but she wasn't sure how big that correction would be. She said that the crucial level for the S&P would be the May 6 level of 2,067, and if we held above that level, then things wouldn't be too bad.

On Monday the S&P went below that level, which turned Boroden's outlook much more bearish. That floor of support at 2,067 has now become the ceiling of resistance.

And while Boroden is currently in sell mode, she pointed out a few key levels that will determine the market's trajectory.





As a refresher, Boroden utilizes a Fibonacci analysis to determine key ratios that exist in the market. This type of analysis is based on the medieval godfather of mathematics, Leonardo Fibonacci. He discovered that a key series of ratios tend to repeat themselves in nature, even in the stock market.

Based on the duration of past swings in the market, Boroden saw a huge cluster of Fibonacci timing cycles appear between Monday and Thursday. The Fibonacci Queen interpreted this as meaning that investors could get a tradable low during this time period.

"Boroden's not saying that this will absolutely happen, but it's worth pointing out that the last time we spoke with the Fibonacci Queen, her timing cycles suggested that the S&P's high on May 30 might turn out to be a peak…and so far that call has been dead right," the "Mad Money" host said.

With this in mind, Boroden believes that the bears are still in control and that this timing window merely means that investors need to keep their eyes out for a tradable low.

So, is this downtrend going to be a major correction, or just a quick drop?

The S&P 500 has been on a very long uptrend for years now. However, within this uptrend have been many declines that are similar to the one seen this week.

"Considering the ugly nature of the current setup, it seems more likely that the S&P still has more room to go lower," Cramer said.

Based on the weekly chart of the S&P, Boroden saw four important legs to monitor. The first level was between 2,048 and 2,054, which is close to where the S&P is currently trading, and kept investors from going lower on Tuesday.

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But it won't take much to fall through that floor, which Boroden said runs from 2,021 to 2,027. If that doesn't hold, then she sees the last floor down 3 percent, from 2,000 to 2,007. If that levels fails, then Boroden wouldn't be surprised to see almost all of the gains earned in the S&P since last fall repealed when it goes down to 1,936.

Ultimately, the oracle of the charts suggests that Monday's vicious selloff probably isn't finished. And while it is possible that the S&P could bottom this week and then rebound, Boroden noted that the rebound wouldn't last for long.

"The charts indicate we could be entering a very difficult period here, and I have to agree that if we do not get a Greek deal shortly, she's going to be dead right on her assumptions," Cramer said.

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