• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

The Market Lacks Liquidity

Brokers are hesitant to take risks due to regulations.
By JIM CRAMER Oct 30, 2014 | 07:26 PM EDT
Stocks quotes in this article: WYN, HOT, H, MA, V, AKAM, ABC, CRL, PRXL, TTWO

A lot of things just don't add up. How could the Baltic Freight Index be up 40% in a short period of time, while bulk commodities (nickel, iron, copper) and their representative companies are pretty much all hitting 52-week lows?

How could the travel and leisure stocks like Hyatt Hotels (H), Wyndham Worldwide (WYN) and Starwood Hotels and Resorts (HOT) all disappoint, while everything else in the sector do amazingly well?

How could the stock prices of Mastercard (MA) and Visa (V) surge on merely decent but not great quarters?

How could Akamai (AKAM) slump in after-hours yesterday and then shoot up today?

How could some stocks like AmerisourceBergen (ABC) be so charmed? The company saw margin pressure and was still be up anyway.

How could Charles River Laboratories (CRL) be down after the best quarter I can recall, with biotech companies throwing money at them? Could people really be selling the stock off of a disastrous quarter by Parexel (PRXL), even though these two companies are in two entirely different parts of the medical food chain?

How could Take-Two Interactive (TTWO) be up so much, simply because the company did exactly what it said it would do, which is to make a lot of money with its existing catalogue of games?

I attribute much of this to a total lack of liquidity. There are only a few big accounts trying to buy or sell stocks, and there is no one else on the other side. These are some of the more exaggerated moves I can recall, and they are happening because no broker is willing to help any client get a trade done. No  broker will short stock to a large account or buy a stock from a large account.

The earnings season has become one of the most frightening times I can recall, for both longs and shorts. The moves are simply unfathomable, compared to previous reporting periods, because of the lack of liquidity. When people want out, there's no price at which they won't sell. When people want in, there's no price they won't buy.

That, and not the earnings, is the theme of this bizarre period. You would think that there would be more players, more stocks, and thicker markets. But that requires brokers taking risk. The biggest current risk for brokers is a government investigation over potential violations of rules (including the Volcker rule) against running an internal hedge fund. We might have to get used to the bizarre present state of the market.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, has 
no positions in the stocks mentioned.

TAGS: Investing | U.S. Equity | Stocks

More from Stocks

It's Official: That Hairy Animal With Claws and Sharp Teeth Is a Bear

James "Rev Shark" DePorre
May 20, 2022 4:31 PM EDT

Along with the media proclamation of a bear market, we have some improvement in the charts of many smaller stocks, but ...

Applied Materials Slips on Miss: Where Will the Chips May Fall

Bruce Kamich
May 20, 2022 1:00 PM EDT

Let's see what the charts say.

Consumer Confidence Is Shot

Bret Jensen
May 20, 2022 12:00 PM EDT

Until things start to improve for the average consumer, it is hard to see significant upward moves for either the markets or economic activity.

I'm Cautious on Marvell Technology Ahead of Earnings

Bruce Kamich
May 20, 2022 11:52 AM EDT

Let's review the charts and indicators.

Retail Stocks Are Moving Fast: Here's One That Might Be Worth Catching

Jonathan Heller
May 20, 2022 11:30 AM EDT

It is refreshing to visit a store that has the items in stock that it claims to on its website.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login