Cramer: This Market Has Changed For the Worse
As U.S. stocks closed sharply lower on Tuesday, Jim Cramer acknowledged that the market has seemingly changed for the worst.
“Parameters that seemed like they were bullish have now left us pondering whether we simply need a pause in the advance or an out and out reversal like we had last year at this time, at least until we get some resolution on these key issues,” the “Mad Money” host said.
A possible Iran-Israel missile crisis is chief among the concerns plaguing the market, Cramer explained. Onlookers wonder whether policymakers will be able to ease tensions and avoid conflict through diplomacy. If tension does continue to mount, though, Cramer thinks the price of oil could revisit its 2008 high. In turn, he thinks the U.S. price for a gallon of gasoline could spike to as much as $6. Such events would devastate an already fragile U.S. economy, but Cramer added the chances of this happening are slim.
(RELATED: Cramer’s Plays on $5 Gas)
Meanwhile, the market continues to wonder whether Greece will default. The ongoing Greek debt crisis continues to weigh on European markets and put pressure on U.S. financial institutions. At this time, Cramer is just taking a “wait and see” approach.
Elsewhere in the market, it seems higher energy costs and weakness in the euro is suddenly affecting earnings results. Strong earnings had been the “bedrock of the rally,” but recent earnings reports have failed to impress, Cramer said. If earnings are disappointing, he simply can’t be as bullish as he once was.
Finally, the market is still bothered by news that China's economy is growing at a slower-than-expected rate. Given both India and Brazil are also facing headwinds, as Europe is still battling its sovereign debt crisis, Cramer doesn’t think the U.S. economy can sustain economy acceleration on its own.
Cramer told viewers he didn’t foresee these problems coalescing in just 96 hours or so, but nevertheless, the culmination of these events has had a negative effect on stocks. He recommends taking profits to raise cash because he thinks there will likely be a lower price to buy more shares going forward.
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