• 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. / Jim Cramer

Jim Cramer: Let's Look Behind the Scenes Amid the Fall

Often hidden reasons are lurking below when there's maximum confusion, and here's what they are.
By JIM CRAMER Sep 03, 2020 | 01:57 PM EDT
Stocks quotes in this article: PD, CIEN, TSLA, RCL, NCLH, CCL, GSK, SNY

When there is maximum confusion, it's often something hidden at work.

Right now, for example, we have a sell-off that used to be of immense proportions, but given the run-up, simply isn't as significant. I can't believe a 5%-6% decline isn't significant, but after this run, the Nasdaq is still up 28% and the S&P, 7%. I think it is realistic to expect a bigger drop in the Nasdaq, simply because the last 10% gain was made pretty much by an insane level of undisciplined buying.

In fact, we have actually been waiting for a sell-off to begin, having made enough sales on the way up that we don't need to take action, even as we took small sales Thursday, ahead of when I come back on Monday and will be frozen on pretty much everything.

Even down where we sold, we were up week-over-week on most, which tells you all you need to know. You never catch the top.

So what do I mean by hidden reasons for selling in the confusion?

First, oil is down, which means interest rates go lower. That's been the linkage forever and, silly as it is, because it doesn't empirically correlate, as everyone knows, except the algos. When interest rates go down, you are supposed to buy tech. Second, you have two stocks that can set things off: PagerDuty (PD) , which is a call management company, and Ciena (CIEN) , which is telecom. Those are both pretty integral to the tech rally, but I don't even know if they are known by the newbies.

Third, you finally have real supply of the most loved stock in the universe, the flagship name for the newbies: Tesla (TSLA) .

Fourth, you have a re-opening of America trade going on with the cruise ships: Royal (RCL) , Norwegian (NCLH) and Carnival (CCL) . Of course, that is directly contradictory to the bonds. But it is also possible that we have reached a tipping point, in which there are enough vaccines in trial that one sticks. I, in particular, like the Glaxo (GSK) -Sanofi (SNY) trial that just started because they know vaccines, they know how to create boosters, it is in their wheelhouse.

So what does it all say?

I think the answer is in none of those. I think the answer is in margin selling, and we are in the thick of it. The newbies only know that stocks go up. I suspect that many are thinly capitalized.

You are always looking for signs of a top. I think that Wednesday, when Barstool's Davey Day Trade put up a picture of the new millionaires that may have been it. Of course, I counseled taking something off the table, but that is forbidden in the newbie world

Can it end soon? Remember that September is a terrible month. Remember that it falls faster on the way down than when it goes up.

And it doesn't end yet, given that the Volatility Index has been up at the same time the market goes up, something that Mark Sebastian has told is a very bad sign for the bulls.

I say if you haven't made sales yet, you still can. I almost never say that. But remember, we are up so much from a few weeks ago you may not even notice the size of what I expect to be the biggest rout of the year.

The newbies cannot stem the decline and the "suits," as David Portnoy calls them, are so far away from where they would buy -- so many stocks trading at times sales when they would be expensive at times earnings, that you just can sit back and watch it fall to better levels.

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

At the time of publication, Cramer, and the Action AlertsPLUS, which he co-manages as a charitable trust, had no position in any securities mentioned. 

TAGS: Investing | Stocks | Bearish Bet | Jim Cramer |

More from Jim Cramer

Jim Cramer: I'll Put My Money With 'Boring but Lucrative' Any Day

Jim Cramer
Sep 29, 2021 1:28 PM EDT

Let's look at that recent downgrade of 'dull' Morgan Stanley and see why exciting is best left for the stadiums and amusement parks -- and not stocks.

Jim Cramer: America's Toughest Job? Finding Workers

Jim Cramer
Sep 28, 2021 12:17 PM EDT

It's the question of our time: Where are the people willing to take on these better paying gigs? Let's see what's going on and what we need to happen.

Jim Cramer: Here's How Analysts Can Be Off By a Wide Margin

Jim Cramer
Sep 24, 2021 12:02 PM EDT

Let's look at the reactions to Nike, Costco and Salesforce to see what happens when they're viewed from a real world perspective.

Jim Cramer: It's Pure Insanity That We Don't Make Chips Here in the U.S.

Jim Cramer
Sep 23, 2021 11:05 AM EDT

While the big guns meet at the White House about the global chip shortage, the president and these companies are approaching this all wrong.

Jim Cramer: Go Ahead, Have a Cow, but I Say Powell and Xi Are Bulls

Jim Cramer
Sep 22, 2021 3:51 PM EDT

We rallied, because China's President Xi and Fed Chair Powell made decisions that they knew would lead to rallies.

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

  • 04:41 PM EDT PAUL PRICE

    First Half Results - Putrid Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 marked...
  • 04:51 PM EDT PAUL PRICE

    We Should Be in for Better Starting Soon

    Window dressing Thursday, the last day of the...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 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