- "I think we got a sneak peak into what this market will look like once the outbreak's truly beat, and to me it looks like a coiled spring," CNBC's Jim Cramer said Monday, after the market digested positive coronavirus outbreak data.
- With uncertainty still in the air, the "Mad Money" host said, "I want to take the other side of today's trade" and that he finds "today's trade [to be] just instructive and nothing more."
- Cramer said he's taking his cue from National Institutes of Health official Tony Fauci before he turns bullish on a rebound from coronavirus fears.
The market gave a glimpse of how stocks will react when the coronavirus epidemic is quelled, but investors shouldn't turn bullish just yet, CNBC's Jim Cramer said Tuesday.
"I think we got a sneak peak into what this market will look like once the outbreak's truly beat, and to me it looks like a coiled spring," he said on "Mad Money," attributing the market's morning gains to positive disease recovery data coming out of China and hedge-fund manager Ray Dalio's suggestion that the coronavirus impact on stocks may be exaggerated.
A market or stock is considered "coiled" when it has potential to catapult after a period of facing pressure.
The stocks of companies with exposure to China, particularly the travel industry, made gains during the trading day. Cramer pointed out that Royal Caribbean Cruises, Norwegian Cruise Line and Wynn Resorts all rallied 3%, United Airlines and Delta Air Lines both gained more than 1%, and that Caterpillar and 3M shares made advances. Many have been hammered after companies canceled travel to and shut down business in China amid the epidemic's spread in the country.
Global growth will be affected by the outbreak, and the executives of companies with China exposure will need to update their forecasts, Cramer said. He believes those probable cuts will still need to be priced in their respective stocks.
It's one reason "I want to take the other side of today's trade [and] why I find today's trade [to be] just instructive and nothing more," he said. "See, they show you where the coiled springs are" when the coast is finally clear.
Despite new information that more people have recovered from the disease than those that have died in China and word from the country's leading virus expert, Zhong Nanshan, that the outbreak could peak this month, Cramer said he's taking his cue from a National Institutes of Health official: Tony Fauci.
"Now, if this guy were a hedge-fund manager, he'd be Ray Dalio," Cramer said of Fauci, the longtime director of the NIH's National Institute of Allergy and Infectious Diseases. "He's been right every single step of the way on this virus, as well as every other one I followed him with."
In a Q&A published Monday by The Washington Post, Fauci said the general public is "naive" about the "rapidly spreading" novel virus, adding "we're not past the point of containment" and that it could "turn into a global pandemic."
Taking note of his comments, Cramer remained concerned about the odds that scientists will quickly find a vaccine for the coronavirus, now dubbed COVID-19 by the World Health Organization.
"Until Fauci grows more positive [and] changes his view, until he says something optimistic, until he disavows the notion of a public-health nightmare in other countries around the globe ... I am staying squarely in the China-off camp," Cramer said, adding, "I recommend that you join me."