Jim Cramer predicts S&P 500 'is done getting slammed,' sees upside ahead
- CNBC's Jim Cramer turned more positive on stocks after the market recovered from big losses.
- "The charts, as interpreted by Carolyn Boroden, suggest that the S&P 500 is done getting slammed, with more upside ahead," the "Mad Money" host said.
- "I share Boroden's positivity on the market in general ... especially now that the recent shakeout has wrenched so many weak hands out of the market," he said.
CNBC's Jim Cramer on Wednesday said investors can expect smooth sailing as Wall Street tries to put a short but turbulent period of decline in stocks behind it.
After the market recovered all its losses from Monday's big plunge, Cramer reviewed chart action to forecast the next move.
"The charts, as interpreted by Carolyn Boroden, suggest that the S&P 500 is done getting slammed, with more upside ahead," the "Mad Money" host said. "I share Boroden's positivity on the market in general ... especially now that the recent shakeout has wrenched so many weak hands out of the market."
In her analysis, Boroden, who is known for Fibonacci trading strategies, spotted a repeat pattern when the S&P 500 experiences a steep sell-off in the course of three days.
In a three-day span that ended Monday, the index dropped almost 3%. A similar multi-day rout occurred in mid-June, twice in May and once in both March and January, Cramer noted.
"Very often this year, the S&P will pull back pretty hard, but it only lasts for three trading days from the last new high," he said. "Boroden's pretty confident this pattern has already repeated itself."
"If we'd been down yesterday, that would've been another story, but we came roaring back. To her, that means the meltdown is probably over," he said.
Boroden, who also contributes alongside Cramer at RealMoney.com, is keeping an eye on 4,359 in the S&P 500. Should the index break through that ceiling of resistance, her next targets are 4,437 and 4,492, Cramer said.
Investors could expect more turbulence, however, if the S&P 500 breaks the aforementioned pattern to fall from a new high for more than four trading days.
"In that case, she'd be a lot more concerned about the possibility of a larger downside correction. But for now, that hasn't happened yet and the future looks bright, which jibes with what we've seen in earnings season," Cramer said.
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