×

Cramer counts the market's 7 'gremlins' that jeopardize any meaningful rally

  • "Mad Money" host Jim Cramer says the market stalls after major advances because of factors like the president and FAANG.
  • The market's "gremlins" serve to prevent any big leg up by creating bigger sideshows, Cramer says.

On a day when the stock market remained fairly flat, CNBC's Jim Cramer wondered why the week's rally seemed to have tapered out after several days of steady rise.

"There's plenty of gremlins at play here that seem to counteract the positives that might let us go higher," the "Mad Money" host said. "Why don't we tick them down?"

1. The President

Cramer's first "gremlin" was President Donald Trump's tendency to go off-script.

"When President Trump sticks to the script on his teleprompter, the market seems to go higher. When he's all caught up in the enthusiasm of the moment and starts improvising, he says things that get in the way of his economic agenda," Cramer said.

The "Mad Money" host said that Trump then tends to blame policy gridlock on Democrats or the media, with the stipulation that the "real" media agrees with him and the "fake" media doesn't.

"So let me be real, Mr. President: I like your economic agenda! So would you mind being kind enough to emphasize it even when you extemporize? It could be fun!" Cramer said. "Instead, talking about the wall or Obamacare or protesters or the non-Fox News media just creates a distraction that pushes out the agenda."

The next issue to threaten the welfare of the Trump administration's economic agenda will be the government's push to raise the debt ceiling, and Cramer doubts it will abate anytime soon.

2. General Disinterest

Cramer has also noticed people losing interest in buying stocks directly. Instead, wary investors choose to fill their portfolios with index funds or other, more risk-averse assets, he said.

"New money just doesn't come in at the pace it did during the great advances of the past," Cramer said. "Without that firepower and with companies spending 17 percent less on buybacks than they did at this time last year, it is difficult to simply levitate."

Cramer argued that at this stage, it's possible that retiring baby boomers are responsible for most of the cash fleeing the market, as well as the aversion to individual stocks.

"I think I'm the only one anywhere who says, "You should buy some." In the '80s, so many people embraced stocks and made fortunes holding them," the "Mad Money" host said. "But these days, stocks feel like vestiges of an earlier era."

3. FAANG

Third, the FAANG stocks, Cramer's acronym for Facebook, Amazon, Apple, Netflix and Google, now Alphabet, are leading market mentality as the few stocks worth buying, Cramer said.

"They're the only stocks that strike people with spare cash as compelling. Hardly anyone wants to own any other individual stocks like a Boeing, that's been so great, [or] a Honeywell. No, they'd rather keep their money in index funds or FAANG. I'm a big believer in index funds, but this, it's gotten ridiculous," he said.

4. The Bears

"The endless bearishness of hedge fund managers weighs on us, too," Cramer said.

He pointed to hedge fund guru Ray Dalio highlighting the country's socioeconomic risks in a LinkedIn essay on Monday and the countless bearish voices issuing public warnings day to day.

"We live in a world where the media quotes managers who've been wrong repeatedly and there's no harm, no foul. So, if these guys aren't chided and ostracized for incorrectly saying stocks are too risky, why wouldn't they keep saying it?" the "Mad Money" host said. "Given how much the financial press reveres big money, this asymmetrical approach to hedge fund jeremiads is appalling."

5. The Analysts

To best illustrate his fifth "gremlin," Cramer used his consistent view on the stock of Apple: "own Apple, don't trade it."

"Only on Wall Street could that be some kind of counter-intuitive, outsider, concept" Cramer said. "This short-termism plays out every day in the analyst-journalist financial community."

The "Mad Money" host pointed to Salesforce's second-quarter earnings report. The cloud colossus beat estimates on the top and bottom lines, but its stock sold off on some analyses that said its gross margin forecast fell below expectations.

"I was aghast and I said so here, but when the stock didn't initially rebound, I was viewed as a houseman and a crank," Cramer said. "Now it's up big. Yet do those who bashed the stock have to pay any price for their shortsightedness? Nope, yet they scared tons of people away from a great stock at a great price."

6. The Dark Star

Former Home Depot CEO Frank Blake called Amazon "the dark star" of retail, and Cramer thinks the e-commerce colossus has made investors think twice before investing in the stock market.

"Maybe he should just call it the Death Star, because many investors act like it's a planet-killer that can wipe out brick-and-mortar chains without batting an eyelash," the "Mad Money" host said. "The perception remains that it's going to wipe out anything it decides to compete against, so why even bother?"

7. The Federal Reserve

The market's "obsession" with the Federal Reserve, particularly in light of the central bank's speakers this week at the 2017 Economic Policy Symposium in Jackson Hole, has kept too many investors out of the market, Cramer said.

Too many market-watchers have taken to hanging on the Fed's every word for signs of whether the market is safe or risky, Cramer said, adding that the central bank's rhetoric rarely serves that purpose.

"Still, because we've been told endlessly that stocks will get slammed when they raise rates or sell bonds, many people fear investing," he continued. "The mindset this nonsense has created is so counter-productive to making money as an investor that it should be a financial crime."

Conclusions

As the stock market's tug-of-war continues during the thin, volatile trading of late summer, Cramer is watching these seven, rally-killing negatives closely.

"Here's the bottom line: we can go up overall, because remember: This is a market of stocks, and stocks represent the future, longer term prospects of companies, not this trading back and forth. Despite these seven sideshows, the main event keeps going ever-higher because most CEOs work hard to create value for the shareholders, which, in the end, is what really matters," Cramer said.

Watch the full segment: Cramer's 12 market gremlins

Disclosure: Cramer's charitable trust owns shares in Facebook, Apple and Alphabet.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

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