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Beware the Terrible Technicals?

Tuesday, 6 Oct 2009 | 6:57 PM ET

Investors who don’t take profits with the Dow above 9,500 are “being piggish,” Cramer said Tuesday. He urged viewers to use this strength to sell some of their holdings.

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Not that he’s expecting a meltdown. But another 3% to 5% pullback, which is common during a bull market, is likely, Cramer said. By cashing out, investors will have some money to play with once stocks get cheaper, below Dow 9,400.

This scenario is much more positive than Bert Dohmen, editor of the Wellington Letter, has predicted. His technical analysis paints “a very bleak picture” of the markets, Cramer said, and Dohmen’s telling his subscribers to get out. Apparently, both the S&P 500’s daily and weekly charts are screaming sell, and today’s rally could be part of the last leg up before the index peaks and comes plummeting back down.

Curb Your Enthusiasm
Cramer says now is not the time to count the chickens before they hatch.

Dohmen even laid out a fundamental case for avoiding stocks, though you’ll hear these reasons from all the bearish pundits these days: Congress is increasingly anti-business, the Federal Reserve could tighten interest rates, the national $8,000 first-time homebuyer tax credit is ending, we could see more foreclosures as state grace periods expire, and economic growth comparisons next year will be tougher.

Still, none of these things concern Cramer right now. He’s not worried about Fed Chairman Ben Bernanke’s leadership, and lower mortgage rates should buoy the housing market. Even Friday’s terrible jobs number failed to hurt stocks this week. Cramer sees nothing extraordinary to warrant fearing a decline of more than 5% to 7% at the most, though 3% to 5% is more likely.

Cramer always welcomes a challenge to his outlook on the market, especially when it comes from someone as esteemed as Bert Dohmen, he said, “but ultimately I just don’t think it’s that bad.” If anything, the real enemy right now is greed.

“You can find that one in the mirror each morning,” Cramer said, “if you aren’t taking off some of your biggest gains right now.”

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