Forget all that talk about a better-than-expected consumer confidence number sending the market higher, Cramer told viewers on Tuesday. And don’t think the Apple upgrade had anything to do with it either. These are not the reasons that the Dow jumped 196 points or the Nasdaq finished the day up 3.5%.
Tuesday’s snapback after Friday’s losses was just a typical bull market in action, Cramer said. The market’s leaders – tech, oil and bank stocks for the move starting in early March – had lost between 5% and 10% and were ready to resume the rally. All they needed was a catalyst, any old excuse, and that’s where consumer confidence comes in. But it could have been anything, really.
Need proof? Look at tech: Apple reached as high as $132 in May before sliding back to $120, a decline of about 10%. Research in Motion fell $7 from $77, a near 10% dip. Google lost about $15, or 5%. In oil, Chevron pulled back 8% to $64 from $70. Exxon Mobil slipped just under 5% to $77 and change. And the banks followed a similar pattern.
Once the pause was complete, the market was again ready to move. This is how bull markets play out. Hence Apple’s near $8 gain, Google’s near $10 and RIMM’s near $5. The banks as a group added 4% to Friday’s close, and the oils rallied as well.
Most importantly, though, ignore the bears that predict a much bigger correction to come. The Dow won’t see 6,500, so don’t expect more than the 5% to 10% dip we’ve already seen.
“I think that’s probably all you’re going to get,” Cramer said.
Cramer's charitable trust owns Chevron.
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