Mad Money

Cramer: Two false assumptions bruise sellers

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If you've sold stocks recently, CNBC's Mad Money host Jim Cramer hopes it wasn't for these reasons. If it was, you've probably lost money.

Assumption 1 – Fed will ruin rally

"The first reason is the Fed," Cramer said. That is, there's a constituency in the market that selling stocks because they believe an improving jobs environment along with an uptick in prices will cause the Fed to raise rates.

"But the assumption fails to recognize the recent decline in food commodity prices and the ongoing retreat gasoline prices," Cramer noted. In other words, inflation isn't the cause for concern that many sellers had thought it would be and, therefore, the Fed has no reason to act.

In turn, selling stocks on the belief that higher rates would sideline an advance, turned out to be wrong.

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Assumption 2 – Correction preordained

Cramer has noticed a feeling among some sellers that a correction was almost preordained, in the wake of recent earnings.

"The, for example, were mercilessly hammered after they reported because all they did was slightly beat the estimates," Cramer said. But sellers failed to anticipate a decline in the price of fuel would ultimately generate a tailwind for these stocks.

Cramer said similar developments happened with Internet stocks after reported earnings that showed a shortfall in local listings. However, sellers failed to recognize that results were better than expected and it was the first time Yelp reported a profit since the company went public. Yelp quickly bounced.

"Retail too," Cramer said. Bears sold these stocks failing to appreciate that "like the airlines, they are beneficiaries of the rapidly declining price of gasoline."

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All told, if you're selling stocks because of the Fed, or because you think earnings weren't strong enough to keep stocks buoyant, Cramer says think again.

"There are legitimate reasons to sell, such as events in Russia," Cramer admitted, but declines triggered by the Fed or earnings aren't among them, In fact, the related weakness has turned out to be opportunities to buy with other catalysts in the market generating points of strong resistance. "That's been the pattern for all of 2014. And I am beginning to believe it will be the pattern from now until this year's conclusion," Cramer said.

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