Be affected person with bitcoin, strategy the S&P with warning
CNBC’s Jim Cramer advises investors looking for entry and exit points to keep a close eye on both stock and cryptocurrency trading in the coming weeks.
The moderator of “Mad Money” checked the chart analysis of Tom DeMark, the founder and head of DeMark Analytics, on Friday.
“The charts interpreted by Tom DeMark suggest that Bitcoin could take another month to bottom while the S&P 500 could peak as soon as next week,” he said. “Given Tom’s track record, that’s a good reason to be patient with Bitcoin and approach the S&P with a little caution.”
DeMark invented the DeMark indicator that some traders use to time the market. The method, which follows patterns to project when a trend could change course, is popular with crypto traders to spot ups and downs, Cramer said.
Cramer checked daily chart action for Bitcoin, which peaked at around $ 65,000 in mid-April. The digital coin will trade above $ 37,300 as of Friday after falling to $ 30,000 in mid-May.
Zoom In Icon Arrows pointing outwards
DeMark, who said the Bitcoin decline was similar to the 1987 crash, predicted the decline could push the token’s value to a floor of $ 32,000 – or at worst, $ 24,000. He now believes Bitcoin will generally hold above the May 19 low, Cramer said.
On October 19, 1987, on so-called “Black Monday”, the Dow Jones Industrial Average collapsed by more than 20%. It was the bookend of a 36 percent decline in the blue chip index since August this year.
“If DeMark is right, you might get a chance to buy Bitcoin in the not too distant future and I could grab it,” Cramer said. “I think that ’87 analogy is good news. After the ’87 crash, the stock market bounced back quickly.”
As for the S&P 500, which closed on a record for the second straight day, DeMark’s indicator suggests the index may be close to a high, Cramer said. DeMark has price targets of $ 4,335 and $ 4,344, about 2% higher than Friday’s end.