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CNBC's Jim Cramer, after consulting technician Carley Garner, said the stock market rally that began in 2019 has not yet reached its pace, even after the Washington-led push for Tuesday.
At the moment, the index is at 67 out of 100, signaling more greed than fear, but "still far from extreme levels where you have to start worrying," Cramer said. When the major averages peaked in the fourth quarter of 2018, the index reached 90 and, according to Garner, "we usually reach our maximum only when we reach 90 or more," he said.
Add to this the fact that only half of the professional traders and investors surveyed for the latest Bullish Consensus Index said they feel optimistic; the recent downward trend of the Cboe volatility index, which measures the evolution of investors on the risk of stock fluctuation in the near future; and that, historically, this is a good time of year for stocks; and Garner sees more momentum coming.
The technical graphics of the S & P 500 seem to confirm Garner's theory. Its weekly chart presents relatively neutral values for two key indicators: a momentum tracking called relative strength index and the slow stochastic oscillator, which measures the pressure of purchases and sales.
"Even though the S & P 500 continues to climb, for example, to … 2,800 – up 2% from now – Garner does not expect either the RSI or the Slow Stochastic [to] Cramer added that the technician could even see the S & P climb to 3,000 when he was above the 2,800 level.
If Garner makes a mistake and the S & P lowers his head, he adds that the support could reach 2,600 support points and, if it is below that threshold, it will fall to 2,400 points. But this scenario is highly unlikely and, if it occurs, would constitute a buying opportunity, she noted.
The monthly S & P graph told a similar story, said Cramer. The index is currently trading at 2,746, between its "strict cap" at 3,000 and its "hard floor" at 2,428, he said, which means it's "basically in balanced".
"For Garner, this means that going up is the path of least resistance for the S & P," said the animator of "Mad Money." "Once the S & P climbs to 2,800, or maybe … in the middle of the 2900s, it's there that Garner is expecting things to turn south and that the pendulum starts to swing in the opposite direction. "
"Do not forget … Carley Garner was perfectly right, and the graphics, as interpreted by Carley, suggest that this market has even more potential here," continued Cramer. "But if we still have a few days like this, she thinks we'll have to worry about irrational exuberance." For now, she thinks we're going higher, and I agree. "
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