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Chart's diamond pattern could mean ugly days ahead

Mina De La O | Stone | Getty Images

After last week's viciously negative action on the averages, Jim Cramer is wondering what could be in store for the future. Could the ugly days of January be behind us now?

To help answer this question, Cramer turned to Dan Fitzpatrick; a technician who is president and founder of

In short, Fitzpatrick is concerned about the broader health of the stock market. When he reviewed the daily chart of the , it was quite an ugly picture.

In fact, he thinks the S&P's multiyear uptrend could now be called into question. Cramer thinks this is a huge deal.

Since November, the S&P has been displaying a rare diamond pattern. Just as a real diamond, this pattern is very rare—but it is far from valuable.

The pattern occurs when there is a diverging set of higher highs and lower lows. Essentially, a time where volatility increases but the peaks and valleys start to get lower.

When this occurs, it means that the ceiling of resistance and floor of support are no longer at extreme levels. Fitzpatrick is worried that the S&P 500 could be in the final phase of the pattern. That is when there is too much resistance for it to break out into the upside, so it ends up breaking down instead.

"In short, Fitzpatrick views this diamond as a sign that the S&P may have peaked and could be ready for a dramatic decline," said the "Mad Money" host.

Fitzpatrick warned that many industrials will get hit hard, and Cramer-fave United Rentals will be slammed. He warned that money managers who have owned United Rentals for years and made a ton of money on the stock are looking to cash out while the profit is there.

"I have to disagree. I think CEO Mike Kneeland runs a real good company, and the fundamentals here are very solid, the latest quarter was strong, and a lot of the recent selling has to do with a reflective dumping of anything related to oil," said Cramer.

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And while Cramer might disagree on United Rentals, he does believe Fitzpatrick when he advised that the broader stock market could be in for rough times ahead.

Even if United Rentals does head lower, Cramer said this one is a buy—especially if there is a marketwide pullback.

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