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I love it! Suddenly it's S&P 900 or bust! Nothing underneath us. The rally revealed as a sham. Even better, a rally in a bear market!
Now we are talking.
A 45% rally in a bear market. Maybe China had an 85% rally in a bear market! We may have had a 7,500-point rally in a bear market since I started trading 30 years ago.
I am even thinking that we have never had a bull market!
Let's step back. There have been no pullbacks beyond 5.8%. This one feels like it could be bigger, but that would certainly be reasonable.
What matters is if things are getting better or just staying less bad. We might get a good read on Friday's employment number, where I figure we'll either go down for the next two days in front of it and then go down some more but not hard after a weak number, or we actually rally after a decent one.
Either way I stick by my earlier call that it is right to sell the aggressive -- materials, banks and minerals -- and buy defensives for the next couple of days.
I misjudged the power of the bank selloff because those stocks have done nothing during the time we have had a lot of good data and I figured they were just digesting the gain.
However, I was impressed at how well tech held and we didn't get a hammering of Apple (NASDAQ: AAPL) (Cramer's Take), Intel (NASDAQ: INTC) (Cramer's Take) or Microsoft (NASDAQ: MSFT) (Cramer's Take). I also like Salesforce.com (NYSE: CRM) (Cramer's Take) into the pullback. It would be something if that one got near where it announced its upside surprise. Nice opportunity there.
So to recap: It's not too late to sell. I figure you can buy stuff back on Friday lower than where we are now even if the employment number is good. I sold more than I bought and will keep on that path until I see us closer to the 6% decline level.
In a bear market, of course.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
9-02-2009 @ 10:17AM
ebrandler34 said...
Jim sounds a little frustrated today. Had to drop the pom-poms and break out the sarcasm stick.
He better take off his shoes and socks, because he'll need all twenty fingers and toes to plug the holes in this dike.
9-02-2009 @ 10:54AM
Iridium said...
When there is no real economic data to back up a 45% rally, you have a bear market rally. The economic recovery was priced into stocks by the end of April.
From there the market kept going up on "recovery optimism". Oil went all the way to $75 on "recovery optimism". Even the derivative market jumped higher on "recovery optimism" just in case the optimism was overblown.
It may take a decade for the earnings to justufy the current price level of most of the overbought corporations. We need a 30% pullback just to put the market back on track where the historical average puts us. Then the market needs to track at a 3-5% growth rate per year. None of this current nonsense.
The facts are:
This downturn did nothing but cement the global multinational as the only type of corporation that will be left standing after this recession is history.
Profitability in the large multinational was only able to be achieved through cost cutting. Forcing employees to do the work of 5-10 other people for less pay. The fear of losing ones job is making people work far more than any person ever should.
The majority of job losses are permanent. Any new job creation will be at a lower labor cost with a net decline in living standards for most Americans.
That the global multinational will only stay is business with the help of global governments picking up the debt tab.
The link between big business and big government has been cemented. One can not exist without the other from here on out.
The liberal captains of industry and radical communists are running the show in order to create a two tiered class system. The hyper rich and the working poor.
Also Jim, you are right when you say we have had a 7500 point bear market rally. The United States has been on a downward trajectory for the past 30 years. Actually the past 40 years. We have not had a net increase in manufacturing jobs for 35 years. Real income value for the average American has dropped over the past 30 years.
Real growth based on M1 has been in decline for a very long time. GDP growth was only created out of leveraging more debt.
Growth through the expansion of debt is not real growth, is it Jim?
9-02-2009 @ 1:07PM
Sheldon L said...
Useless Information
9-02-2009 @ 2:17PM
Jerry said...
S&P will triple its present level by the end of 2011. You heard it here first. The market was tremendously oversold during the recession/near depression. Only 5% of the stimulus has landed, yet the market is already up 45%.
This is the buying opportunity of a lifetime.
9-02-2009 @ 2:18PM
Kent Dern said...
The brokerage Oppenheimer & Co. needs to pay back frozen auction rate securities holders for this economy and market to have legs. They owe clients $1 billion, money that will be invested in the marks, stock and real estate.
Hey Oppenheimer - when TD Ameritrade, Fidelity, merrill, Morgan, Citibank, et all pay back clients, why won't you? And what about those insider trading charges from the state of Massachusetts, what you gonna do about that?
9-02-2009 @ 4:33PM
beachpaul said...
Was this the 4th or 5th trip up&over the DJIA 9,000+ ladder this past school year, eh, Jimbo? Oh, I'm sorry. I lost track! Well, there is a new school year beginning. Maybe by October we will be back where we were last October. Another successful year of kicking the can down the road and picking up some sweet change along the way, fundamentally speaking, of course. Speaking of fundamentals, Jim, you are starting to resemble what my father used to call a "bullshit artist".