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Charts suggest it’s ‘way too early’ for the market to rebound

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CNBC’s Jim Cramer on Friday warned investors that the stock market is unlikely to recuperate anytime soon.

“The charts, as interpreted by Mark Sebastian … suggest that this market’s got more downside, and it’s way too early to go really bullish,” he said. 

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“Unlike him, I also imagine we could get a pointy spike up, but, for our Charitable Trust, if that happens we’ll should do some selling,” he added.

The S&P 500 closed out its worst month since March 2020 on Friday. The Dow Jones Industrial Average tumbled 8.8% for the month, while the Nasdaq Composite dropped 10.5%.

Before entering into Sebastian’s evaluation, Cramer first explained that when the S&P 500 goes lower, the CBOE Volatility Index, also referred to as the VIX or fear gauge, typically moves higher. And when the S&P moves higher, the VIX typically goes lower. 

He then examined a pair of charts showing the each day motion within the S&P and the VIX:

Zoom In IconArrows pointing outwards

While the S&P and VIX moved at the identical pace in June, things took a turn in August. Sebastian notes that when the S&P began falling in late August, the VIX had a “slow-rolling rally” as an alternative of roaring prefer it typically would, based on Cramer.

This mismatch in movement between the S&P and VIX’s movements continued through early September but only really exploded this week, Cramer said, adding that the market still is a great distance from recovering.

“Sebastian’s waiting for the S&P to go down while the VIX also goes down — that is a classic tell that a sell-off’s coming to an end,” he said. “That will not be happening right away.”

For more evaluation, watch Cramer’s full explanation below.

Watch Jim Cramer break down fresh technical analysis from Mark Sebastian

Jim Cramer’s Guide to Investing

Click here to download Jim Cramer’s Guide to Investing for gratis to aid you construct long-term wealth and invest smarter.

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