Jim Kramer said Tuesday that the market would likely trade sideways rather than stage a dire rally if it rallies. Based on analysis by DeCarley Trading market strategist Carly Garner.
“Graphs interpreted by Carly Garner suggest the near-term pain may be over soon. But don’t expect us to return to turbo rally mode. Instead, they anticipate a long period of side-by-side consolidation as we work on foam made in 2020 and 2021,” said host Mad Money.
Charts show market pain highlights two important facts to keep in mind when considering today’s markets:
Charts show market pain are currently in the middle of the earnings season. Garner believes that “downward markets often support quarterly earnings, especially when seasonal trends are on your side. As they should be right now,” according to Kramer. Commodity prices have fallen, and the bond market shows some stability signs. Garner “is not predicting blue skies from now on, but at least he thinks this market has moved to a retention model where we can see surprising strength,” Kramer said.
“The VIX directly measures the urgency of traders to buy put options on the S&P 500 to protect their positions. “Since the VIX and S&P 500 tend to move in opposite directions, you can assume that the peak in the volatility index is good news for the stock market,” Kramer said.
He said Garner saw the VIX do a head and shoulders formation. A reliable model showing signs of a possible peak. According to Kramer, the index has declined significantly over the past five months. But the current correction is still tiny compared to the 20-month gain seen in March 2020.
“Let’s put it this way: from the bottom in 2009 to the top in 2020, the Nasdaq 100 returned 7,000 points. … If the index follows a long uptrend, where is it? “Garner said it would probably be around 8,000 points over 13,000,” he said.
The gains on the daily Nasdaq 100 chart suggest the index has fallen below the trend line and returned to its March 2021 low, Kramer said.
“Although he didn’t anticipate a sale of that magnitude, he also couldn’t completely rule it out,” he added.
“While the VIX is currently above 30, Garner sees it going a lot lower, perhaps back into the teens. As long as it doesn’t break 35 and starts over – complete the head and shoulders model. But, again, that will be very bullish for the market because when the VIX is down, the S&P is almost always up,” Kramer said.