Jim Cramer is a huge fan of measuring a stock based on its fundamental analysis. Meaning, understanding the earnings and valuations of a particular company before adding the stock to his portfolio.
However, the "Mad Money" host also thinks that valuable information can be garnered from technical analysis of charts. That is why for Chart Week this week, he turned to Carolyn Boroden for her interpretation of where the market is headed based on what is in the charts.
Boroden is a technician who runs FibonacciQueen.com and is one of Cramer's colleagues at RealMoney.com. Leonardo Bonacci, who went by the nickname of Fibonacci, was an Italian mathematician from the Middle Ages who found that a series of key ratios tend to repeat themselves over and over again in nature.
Boroden applied these key ratios based on past security swings in order to figure out if the S&P 500 could change its trajectory soon. To begin she emphasized the importance of Fibonacci price extensions, which are retracements beyond 100 percent. She uses those levels to determine where potential support and resistance levels are for the index.
"Basically what I have seen in the past is that many moves tend to terminate at extensions of prior swings," Boroden said.