Jim Cramer: Don't Wait for Lightning to Strike Deadweight Stocks

 | Feb 21, 2018 | 7:28 AM EST
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The VIX remains in play. The 10-year is still on the verge of 3%. We've had some decent earnings but we've also had some subpar ones, like Walmart WMT.

So, what sprung us? I think it was an oversold condition the likes of which we haven't seen in several years and when we saw it last we got a similar burst higher before another, not as bad tumble down, and then an epochal advance.

The snapback this time from the low S&P oscillator reading -- for the record, minus 10, which has been a springboard almost every time I can recall save the crash in '87 and the myriad throes of despair when our banking system almost collapsed in 2008-2009 -- has been almost equally as vicious as the decline.

We are now, however, no longer oversold. We are plus 1.5 oscillator, which is neither here nor there and certainly not enough to prevent a drop based on a stronger dollar, weaker oil prices, some not-so-hot earnings, a spike to close to 3% on the 10-year or any sort of higher VIX activity.

We have raised a huge amount of money for the Action Alerts PLUS charitable trust, to the point where we are ready and eager to put some back on a downturn. We don't expect a huge one. You tend not to get as sharp a falloff after just having one, simply because there are so many hedge funds that build up short bases into declines, just as there are plain vanilla funds which build up longs into advances. Hedge funds tend to be incorrigible about building shorts after the horses have left the barn. They are a strange group.

We will use the decline to buy after one last clean out of marginal positions that we have lost faith in and we have vowed to keep a tight leash on all positions of a losing varietal. I think it is a decent time for you to do the same. Do you have stocks that could not advance during this bounce?

My intuition says that those stocks will be millstones around your neck for this period and longer and that you are only carrying them because you hope that lightning strikes.

Lightning striking isn't worth waiting for. There are other, better stocks to own. And cash ain't that bad either.

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