One trusted chart analyst thinks the market is still rallying but warns that investors should protect profits as 'real trouble' looms, says Jim Cramer on 'Mad Money.'
host on Monday broke down one trusted technical analyst's bearish prognosis of the market and, though he doesn't agree with the conclusion, he warned that the scenario is "on the table in a lot of people's heads." The widely quoted large-cap index closed the session above 3,006, nearly 20 points off its all-time closing high from July.
"It never hurts to be a little cautious as we keep climbing," he added. "I think there's more to the bull market than Garner gives it credit for. Still, we need her perspective — she's been right on a lot of things — because now if things do start rolling over, you'll understand what the technicals say about the possible downside in front of us."
The index can rally in the short term, but the longer it runs the more negative impact it will have on the Relative Strength Index momentum indicator, Cramer said, explaining Garner's thinking. The RSI oscillator, which measures price changes in stocks, will risk shifting into overbought territory and sending the market back down, the host said."If that ceiling holds, Garner says, you want to be prepared for a sell-off, possibly for a severe one," Cramer said.
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