According to Boroden, if the recent rally in the S&P is going to continue it needs to be able to jump the next hurdle, which is a thick ceiling of resistance in the 1436 to 1446 area – a key Fibonacci level.
The market tried and failed to pierce that level earlier in the week – so the current pullback is expected.
But - the S&P also has a floor of support created by another key Fibonacci level - and this floor is at 1414.
"As long as we stay above that floor, Boroden thinks that the path of least resistance for this market is higher, and today the floor held," Cramer explained.
What's the bottom line?
According to technical analysis, if the S&P holds 1414 and then breaks above 1446, the current rally could endure.
However there's a fundamental wild card in the market – the fiscal cliff. And if we go over the cliff, technical analysis could go right out the window.