GO
Loading...

Cramer: What could end this market's bull run

As major stock market averages surged Monday morning, coming off their worst weekly performance since January, CNBC's Jim Cramer has grown increasingly uneasy about the level of exuberance in the market and number of IPOs in already "frothy" sectors.

With a steady stream of biotech and cloud-computing stocks set to debut this week, Cramer wondered whether the market has room for those companies. Investors don't like to hear it, Cramer said, but parallels must be drawn to the recent performance of stocks like Plug Power to the dotcom bubble of the early 2000s, a comparison the former trader has made several times in recent weeks.

"These are bad signs," Cramer said Monday on "Squawk Box." "And I want to avoid them. I want to close my eyes to them. But boy, that's always been a mistake. I'm not going there."

Cramer called electric car-maker Tesla Motors—a stock that has seen a 566 percent price increase in the last 52 weeks—"the heart and soul of this market," meaning its performance is indicative unchecked enthusiasm on the part of at least some investors.

(Read more: Fed meets amid market skittishness)

Last week, JPMorgan Chase's head U.S. stock strategist, Tom Lee, told CNBC that bull markets that run longer than four years end from recessions. Cramer eyed a much different culprit on Monday. He believes insider selling could eventually tank IPO-heavy sections of the market.

"Everyone wants to say these things only go down in a recession," Cramer said on "Squawk on the Street." "No, insider selling overwhelming the market is what drives down that component. That's what kills it."

(Read more: If Ukraine got out of hand, could Fed save stocks?)

The good news? Markets driven by speculation can last longer than some think, and Cramer said he has't seen strong evidence of insider selling just yet.

"That's not happening yet," Cramer said. "So you can still get excited and and think, 'Oh, Cramer is so old. He's so pathetic. He's wearing a green tie. Who's he pretending to be.' I don't even care."

Disclosure: Cramer's charitable trust does not own shares of Plug Power of Tesla

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."

Disclaimer