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I didn't find this recap of Jim Cramer's CNBC show interesting because of his recommendations. I found it interesting because he talks of an overall "bearishness of the market." Cramer noted that this bearishness began in the tech sector, spread to retail, and is now creeping into the food sector.
He notes that it is "remarkable to see how little enthusiasm there is ... even for companies that are doing well." An example of this lack of enthusiasm for good performers is that analysts will cut price targets on a stock, but will raise the company's earnings estimate at the same time.
This situation is interesting, as it demonstrates that there is some room for optimism to creep in and act as an upward catalyst. However, while the fact that earnings estimates are increasing suggests that there is optimism, there's also plenty of room for pessimism to infiltrate traders' psyches.
What does this sentiment mean to the everyday investor? First, there is plenty of opportunity for the market to make a quick move in either direction. For example: good news before the bell could cause more bulls to come out of hiding and what would have been the catalyst for a 50-point move in the past now leads to a 100-point jump when the opening bell rings (we never see this happen nowadays, right?). How about the other direction? Bad news could lead to a sell off when the opening bell rings (or immediately after the news is announced). We often see these scenarios play out when dealing with major economic news or earnings.
This situation proves the point that investors need to pay attention to specific news events and try to gauge sentiment. So basically, Cramer has seen an increase in negative sentiment. Monitor the situation, because an unwinding of this sentiment could cause the market to move quickly.
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