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CNBC’s Jim Cramer said Tuesday that technical analysis indicated that the stock market may be approaching a near-term peak.
“The charts, as interpreted by legendary Tom DeMark, suggest the market is approaching a top, especially the S&P 500 and the Nasdaq 100. He also doesn’t like the Dow Jones Industrial Average,” the “Mad Money” the host said.
DeMark’s analysis failure comes a day after Cramer examined the charts of another trusted tech, Larry Williams, who also predicted a “tough month” for the S&P 500.
Cramer said that for DeMark, a short-term spike for an index happens when it hits its target price patterns while its time countdown flashes a sell signal.
“So far, DeMark’s patterns for time and price just haven’t coincided, so rather than a major peak leading to a sharp decline, we’re sort of getting these garden variety withdrawals, can -being 5-10% or less then the rally but now it’s different, “Cramer said.” Now DeMark’s timing and pricing models are finally in line and he thinks we might see a top soon. significant in both the S&P 500 and the Nasdaq 100. “
Here are two charts using DeMark’s analysis, the first being that of the S&P 500.
The second is that of the Invesco QQQ Trust, a popular ETF that mirrors the highly technical Nasdaq 100.
The S&P 500 and QQQ are both on day 12 of DeMarks’ well-known 13-session sequential model, according to Cramer.
To reach 13, the S&P 500 must break above 4,430 intraday and close above 4,419, Cramer said. He finished Tuesday’s session at 4,423.15.
“It could easily happen tomorrow if the S&P picks up so slightly in the morning… and then hangs on for the rest of the day,” Cramer said. “He’s a very threatening model.… Tomorrow is day 13. It’s pretty much a pivotal session.”
For QQQ, Cramer said, “This countdown will go to 13 and trigger a sell signal as… QQQ closes above 369 – up just a few points so we’re very close.” The QQQ ended Tuesday’s trading day at 366.81.
“If the S&P and the Nasdaq-100 both give you these sell signals around the same time, DeMark thinks it could get ugly,” the host of ‘Mad Money’ said. “This is the first time that this has been a real possibility since the low in March of last year. Of course, if it’s wrong, there’s a chance the S&P and the Nasdaq could both give you a fast two or three day rally in a good … media environment, but at the moment DeMark thinks a significant top is much more likely. “
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