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Cramer: Progress Toward Fixing the Market

Tuesday, 14 Jun 2011 | 6:08 PM ET
Cramer's Checklist for a Better Market
Mad Money host Jim Cramer shares his insight on Bernanke's speech, and whether the markets will go back on track.

It’s too late to sell in this market, Cramer said Tuesday, but it’s not too late to buy.

Earlier this month, the “Mad Money” host set up a list of “cure-alls” that he believed could get us out of a bad market. Thanks to Tuesday’s action, Cramer believes he finally saw some progress toward those four milestones.

First, he wanted to see lower stock prices. Well, Monday pretty much wiped out the gains for the year, he said. The market tumbled more than seven percent from the highs and some stocks fell more than 20 percent from their tops. The sell-off came on the heels of estimates reductions and downgrades for several stocks.

“That’s actually good news,” Cramer said, “because in order for a rally to be sustainable, not a one-day wonder, it needs to be built on reduced expectations for the economy in general and companies specifically.”

He also thinks Monday's intraday reversal up shows that people reached a point where they just got tired of selling – creating what he calls a “whoosh” bottom during Monday’s market.

Second, Cramer wanted an agreement on the debt ceiling. While there is no agreement in place, there have been constructive talks between Republicans and Democrats in Washington. Plus, Federal Reserve Chairman Ben Bernanke set some substantial long-term goals Tuesday and the President is “now all about jobs.”

Third, the price of oil needed to drop. The cost of gasoline is going down, and at one point crude dipped 14 points from its high. But Tuesday's action was disappointing, Cramer said, with oil rallying close to $100. He thinks things are looking up, however, with the Saudis favoring a boost in oil output. He also believes a resolution in Libya appears closer at hand, which could bring back a million barrels a day into the world’s supply.

If there were an increase in the margin requirements for oil futures, it "would be a knockout punch for the price of oil,” he said.

Lastly, Cramer wanted an indication that the Chinese central bank might stop raising interest rates. Monday night the country showed in-line inflation and in-line industrial production, as well as another reserve tightening from the central bank.

“Better than whispered inflation numbers and healthier industrial production means that China could have a soft landing, not a crash and burn,” he said.

So there’s progress, although the checklist is not complete. Cramer believes the market could still get hammered if there are weak unemployment claims, gas goes back up above $4 a gallon, debt ceiling talks breakdown or there is negative news from the Chinese central bank.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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