Charts suggest S&P 500 is seeing a temporary rally and more downside may be ahead, Cramer says

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Charts suggest the S&P 500 may be the midst of a temporary relief rally after weeks of tough sledding on Wall Street, CNBC’s Jim Cramer said Tuesday.

The “Mad Money” host’s comments came after the broad equity index jumped 1.05% Tuesday, rebounding from a technology-driven sell-off in the prior session.

“The charts, as interpreted by Carolyn Boroden, suggest that today’s bounce might not be the end of the relief rally because we were due for a reversal, even if it’s a temporary one,” Cramer said.

Boroden, a technician who runs FibonacciQueen.com, believes the S&P 500 “could still be vulnerable to more downside,” Cramer said. “But — and this is a very big but — it also looks due for a tradeable low right here, right now.”

The reason Boroden thinks that is because she’s identified a cluster of seven Fibonacci timing cycles that are set to come due between Tuesday and Thursday, Cramer explained. That technical indicator suggests the S&P 500, which has struggled in recent weeks, could change trajectory, he said.

Technical analyst Carolyn Boroden sees seven Fibonacci timing cycles between Tuesday and Thursday.

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“Again, though, she’s only looking for a temporary countertrend rally and not an actual bottom,” Cramer said. “Even that isn’t guaranteed,” he cautioned. “Just because we’ve got a bunch of Fibonacci timing cycles coming due at the same time doesn’t necessarily mean the S&P will make a low and reverse course.”

Cramer said Boroden will only start to put her faith in a more sustained rebound until she spots a solid buy signal, which for her is when the five-day exponential moving average crosses above the 13-day exponential moving average.

Carolyn Boroden’s technical analysis that shows the S&P 500’s five-day exponential moving average compared to its 13-day exponential moving average.

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“That just hasn’t happened yet, and it would take a few more days of upside to even get close,” Cramer said. “Until we get Boroden’s favorite moving average crossover, she can only see this rebound as a bit of a relief rally. That said, even if we can’t shake the broader decline, she’s convinced that we’re due for a bounce and today may be just the beginning. I think she’s making a compelling point.”

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