major selloff predicted

The technical analysis that correctly called the market bottom in December is now calling a top in the S&P 500, CNBC's Jim Cramer said Tuesday.

The "Mad Money" host said a colleague of his at RealMoney.com is warning that "we're really cruising for a bruising" beyond the 1.56% decline Tuesday by the index.

Bob Moreno, chartist at RightViewTrading.com who projected in February that the market had more room to run, warns of a possible plummet in the large-cap index.

"Now those same charts tell Moreno that we're approaching an important moment and he's predicting a major sell-off from these levels, a 10% decline in the S&P," Cramer said.

That would bring the S&P below 2,620 from its 2,893.06 Tuesday close.

Since its low following the major December sell-off, the S&P 500 has gained about 27%. The index made a series of higher highs and higher lows during that expansion, but Moreno is convinced that momentum was disrupted in September when it produced a lower high, Cramer explained perusing the weekly chart of the S&P 500.

According to FactSet, the S&P 500 posted a closing high of 3,025.86 in late July and failed to break past 3,010 in September, a potential peak. Moreno, Cramer said, determined that to be a "double top," which is a bearish technical reversal pattern.

"Moreno believes the S&P is going to test its floor of support again, only this time that floor is at 2,825," Cramer said. "But if it fails, and he thinks it will, another floor at 2,725. That's where the S&P bottomed in March and June."

"Unfortunately, he doesn't see that trading floor ... holding either," Cramer said. "If the S&P breaks down from the current consolidation pattern, we could have not a little but a lot more downside."

There are more bearish indicators in Moreno's analysis. He notes the Moving Average Convergence Divergence indicator had a bearish crossover, which means momentum is slowing, and the Chaikin Oscillator supply/demand indicator dropped below its center line, which means money flow is negative, Cramer said.

"He's hoping the S&P 500 can find a floor at the 2,600 level. ... That's still a long way from a retest of last December's lows, but it's pretty horrible," he said. If the floor at 2,600 fails, Moreno "did say when we talked to him that if this fails, we could revisit [the December] level."

Chartists analyze past price action in stocks to forecast future price direction.

"Do I agree? Moreno's views echo my own for vast swathes of the market, but as someone who likes individual stocks, I'm ready for chance to buy best-of-breed names at bargain basement prices," Cramer said.

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So he's predicting a floor at 2825, another floor at 2725, and another floor at 2600.  Then I guess 2350 which is where the December low was.  Well, that narrows it down...

I'd be looking to buy at each floor because nobody really knows which floor is actually going to hold.

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Looking at the chart, I'd be looking to buy at around 2850 which is near the August bottom and the 200-day MA.  Then I'd look to buy at around 2750 which is near the beginning of June low.  Then maybe 2650 which is around the Oct/Nov 2018 lows.  Then around 2400 as it approaches the December low.  Maybe one of those will prove to be the bottom.