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S&P 500: Why Jim Cramer Sees a ‘Make-or-Break Moment’

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Sep. 4 2020, Updated 6:55 a.m. ET

  • Jim Cramer sees a “make-or-break moment” for the S&P 500 based on technical charts. The index rose 20% in the second quarter and narrowed its year-to-date losses to only 4%.
  • While several leading fund managers have been expecting a US stock market crash, they haven’t had any victory. The US markets have closed with gains for three consecutive months.
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S&P 500

The S&P 500 (NYSEARCA:SPY), which briefly turned positive for the year in June, has only fallen by about 4% in the first half of the year. Fundamentally, most fund managers are bearish on US stock markets. Most of them expect US stock markets to crash given the glaring disconnect between markets and the real economy. Meanwhile, based on technical parameters, Jim Cramer sees a “make-or-break moment.”

Jim Cramer on US stock markets

Cramer has expressed his views based on a charting analysis by FibonacciQueen.com’s Carolyn Boroden. She has a 3,720 target on the S&P 500. According to Cramer, if the S&P 500 can’t break through 3,100 levels, “Boroden thinks you need to prepare for pain because the near future could get ugly.” He also said, “Given that we failed to break through that resistance, she’s worried about potential downside here.”

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S&P 500 resistance

Previously, the S&P 500 faced stiff resistance around its 200-day moving average, which was around 3,000. After multiple failed attempts, the index finally crossed the 200-day moving average decisively. Eventually, the index rose sharply and turned positive for the year. However, rising COVID-19 infections in US states and dire warnings on the economy from Fed Chair Jerome Powell and the IMF dampened the sentiments. As a result, US markets pared some gains. Markets came back towards the end of the month and turned positive for June. In the second quarter, the S&P 500 had its best quarter since 1998, while the Dow Jones Index (NYSEARCA:DIA) had its best quarter since 1987.

Canaccord Genuity’s chief market strategist, Tony Dwyer, thinks that US stock markets are in a bull market. He expects the S&P 500 to rise beyond 3,300 over the next 12–18 months. Paul Tudor Jones and Stanley Druckenmiller, who previously bet that US stock markets would crash, recently ceded defeat to bulls. Read US Stock Market Patron Druckenmiller ‘Humbled’ to learn more.

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