CNBC’s Jim Cramer on Wednesday said that the benchmark S&P 500 is at a crossroads, poised to either tumble further or roar higher.

“The charts, as interpreted by Jessica Inskip, suggest that we’re all at a very important moment where the S&P 500 found an equilibrium between the floor of support and a ceiling of resistance. At this point, something has to give,” he said.

Stocks tumbled on Wednesday after fresh December retail sales data renewed fears of a recession. Investors also took profits on gains from earlier this month, spurred by soft economic data that suggested the Federal Reserve is winning its fight against inflation.

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

To explain the analysis from Inskip, who is the director of product and education at OptionsPlay, Cramer examined the daily chart of the S&P 500 dating back to November 2021.

The chart shows that earnings season is often a time of volatility marked by strong rallies and declines. It also shows that the S&P 500 has been on a downtrend for over a year, with the downtrend line acting as a ceiling of resistance for the market since the Federal Reserve began its battle against inflation in November 2021, according to Cramer.

Inskip notes that the ceiling has never been breached even after powerful rallies from the last two earnings cycles, he added.

But while the past two earnings seasons started with the index at levels close to the low end of its trading end, the current fourth-quarter earnings season saw the S&P 500 start right below the ceiling, Cramer said.

“Good [earnings] numbers could give us more upside than we’ve seen from the last few quarters, but bad ones might mean the S&P heads right back down to the low end of the range,” he said.

For more analysis, watch Cramer’s full explanation below.