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Jim Cramer: This Is the Most Contradictory Market

Tuesday, 8 Nov 2011 | 6:10 PM ET
Markets: Irrationality is Rampant
Mad Money host Jim Cramer says this market is contradicting itself in ways that should be impossible, but high-yielding stocks may be one method where investors can still make money, despite all the irrationality.

This stock market just doesn't make sense, Jim Cramer said Tuesday, calling it the most contradictory market in his 31 years of investing. The "Mad Money" host noted six "glaring inconsistencies" in particular:

1) Oil: If Europe is weak, why does the price of oil continue to climb? Oil prices shouldn't be so high if Europe's economy is unhealthy, Cramer said. Plus, oil-producing countries, including Brazil, Iraq and the U.S., are producing more oil now than they were before.

2) The euro: How can the euro have seemingly stabilized as Greek leaders struggle to agree on a new premier and other European countries continue to struggle? The FXE , an exchange-traded fund that measures the euro versus the U.S. dollar went up on news Italian Prime Minister Silvio Berlusconi will resign after the parliament passes economic reforms demanded by the European Union. Cramer thought it would have been just the opposite.

3) European banks: Cramer thought Europe’s financial institutions would be swooning, as U.S. banks had during the financial crisis of 2008, but they are not. Instead, European banks are buying sovereign bonds and their stocks are staying higher.

4) Gold: The precious metal has long been the "ultimate barometer" of economic and political chaos, but the price of gold actually fell on news the Italian prime minster will step down.

5) Copper: Copper also appears to have stabilized, even though the world's largest consumer of copper, China, is weaker.

6) European weakness: Many American companies doing business in Europe haven't seen much European weakness, Cramer noted. Companies like Eaton , Honeywell and Oracle , for example, are not seeing the kind of weakness that was expected.

So what's going on here? Cramer thinks the big hedge funds may have placed major bets that have gone wrong. These are big money bets, too, so they can move the market.

To play this market madness, Cramer recommends high-yielding stocks. In a world of low interest rates, dividend-paying stocks may be the one way to make money right now. Read on for Cramer's Top Dividend Stocks 2011.

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When this story was published, Cramer's charitable trust owned Eaton.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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