Kramer says the charts suggest the S&P 500 is in a make-or-break moment

CNBC’s Jim Cramer said Wednesday that the S&P 500 is at a crossroads, and is preparing either to fall further or to rally.

“The charts, as interpreted by Jessica Inskeep, indicate that we are all at a very important moment as the S&P 500 has found a balance between a floor of support and a ceiling of resistance. At this point, something has to offer,” he said.

Stocks fell on Wednesday after retail sales data for December renewed fears of a recession. Investors also cashed in on gains made earlier this month, spurred by weak economic data that indicated the Federal Reserve was winning its battle against inflation.

The S&P 500 fell to its lowest level in about a month, while the Nasdaq broke a seven-day winning streak.

To explain analysis from Inskip, Director of Product and Education at OptionsPlay, Kramer checked the daily chart of the S&P 500 dating back to November 2021.

The chart shows that earnings season is often a volatile time characterized by strong highs and lows. It also shows that the S&P 500 has been in a downtrend for more than a year, with the downtrend line acting as a ceiling of market resistance since the Fed began its fight against inflation in November 2021, according to Kramer.

And Inscape noted that the ceiling was never breached even after the strong rally from the last two earnings cycles, he said.

But while the past two earnings seasons started with the index at levels near the low end of trading, the current fourth-quarter earnings season has seen the S&P 500 start right under the roof, Kramer said.

“Hassan [earnings] The numbers could give us more upside than we’ve seen in the past few quarters, but bad numbers could mean the S&P is heading down to the lower end of the range.” He said.

For more analysis, see Kramer’s full explanation below.