Cramer: With ‘Cliff’ Looming, Why Is S&P Advancing?

"With all the consternation about the fiscal cliff and the damage it could do to the economy, you'd think the major averages would be flat-lining or falling," said Jim Cramer.

But they're not.

Over the last 4 weeks, the S&P 500 , as well as the Dow have both gained a little more than 3%.

Considering fundamentals are horrible yet the market advanced, Cramer turned his attention to the technicals, to see what they suggest may lie ahead.

The follow insights come from Carolyn Boroden, a technician who runs FibonacciQueen.com and a Cramer colleague at TheStreet.com.

You may remember Mad Money profiled Boroden's analysis on November 20th. "She's been dead right about this stuff which is why I'm coming back to her so often," Cramer said.

Read More: Scaling the Abyss - 9 'Buys' if Nation Falls Off Fiscal Cliff

Currently Boroden thinks that the S&P's next move is all about hurdles – or key levels of resistance. In technical analysis, if patterns break above key levels – what was once resistance becomes support.

NYSW trader floor

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.

Read More: Cramer's Plays on Housing Rebound

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