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Who Hijacked This Market?

Disappointing unemployment claims, a Philadelphia Federal Reserve index showing no hiring and BP CEO Tony Hayward’s testimony before Congress, the market should have taken a big hit on Thursday. But instead we saw the Dow climb 25 points and the S&P 500 remain in positive territory. Why?

“The pajama game,” Cramer said during Mad Money’s “It’s a Family Affair” show.

He thinks the market has been hijacked by traders at home, sitting in bed with their laptops. The problem is that they are buying and selling at a furious pace, but basing their decisions on all the wrong data. Ultra-short exchange-traded funds just add to the fury, and they are further empowered by high-frequency traders who follow their lead.

Look, these high-frequency and program trades now comprise 80% of the market, up from 30% not too long ago, so Mad Money viewers must understand that the people behind these trades don’t care about individual stocks. To them, stocks are mere commodities to be controlled.

And again, the worst part is that they’re all trading on incorrect data. One chart they watch is the CurrencyShares Euro Trust, an exchange-traded fund that represents the euro. That rallied hard today, Cramer said, and the pajama party bought up huge baskets of stocks in tandem.

Here’s the catch, though: The euro went up only because the US economy is looking so weak and the dollar dropped accordingly. Remember the aforementioned unemployment claims and the damage BP’s Gulf of Mexico oil disaster has done to the coastal states’ economies? Well, the pajama party bought up US stocks and indices on that weakness not realizing that they will eventually come back down as the economy gets still weaker and takes the fundamentals of US companies with it.

“That’s why we actually rallied,” Cramer said of today’s markets.

So not only have these traders hijacked the markets, they’re making a big mistake. But as long as the pajama party is in control, Cramer said, Mad Money viewers need to know that the fate of many closing stock prices “rests in their ludicrous hands.”

A previous version of this story misstated the BP CEO's last name.

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