Charts suggest the Nasdaq 100 and S&P 500 could be days away from bottoming, Jim Cramer says

Legendary chartist Tom DeMark thinks key U.S. stock market indexes could be days away from reaching a bottom, CNBC's Jim Cramer said Wednesday.

"We'll be in some more pain before we get there," Cramer cautioned, as he broke down analysis from DeMark and his team focused on the S&P 500 and Invesco QQQ Trust, a popular ETF that tracks the tech-focused Nasdaq-100. Both the S&P 500 and Nasdaq-100 saw strong gains Wednesday, posting their first back-to-back positive sessions since late February.

"What we're looking at right now could be premature buying," the "Mad Money" host suggested. "When the shorts have finished, DeMark says that often creates a downside vacuum—a big move lower once the shorts have covered their positions and there's no more forced buying," he added.

According to Cramer, DeMark uses a 13-session countdown pattern that tells him when a rally or a decline is likely to change directions, or in other words, reach a top or bottom. DeMark's methodology calls a bottom when the countdown gets to 13, Cramer added.

Cramer said that DeMark spotted patterns in the S&P 500 and the ETF that tracks the Nasdaq-100 that suggest both are days away from making bottoms.

Here's a look at the QQQ since September, including the two trend exhaustion 13s late last year.

Keywaylock
08/10/2022
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