The Dow will not cross 10,300, Cramer said during Wednesday’s Stop Trading!. At least not until we get good news enough to justify it.
That’s the level at which Cramer told investors on the Today show in October 2008 to “get out” of the market. He’s been saying all along that he didn’t think the market as it stands now could crack that ceiling. Circumstances would have to improve significantly for that to happen.
But that doesn’t mean a sell-off is coming, either, which is something that Wall Street guru Doug Kass has predicted. With cost cuts fueling earnings more than growth, consumers adding on debt and America increasing its budget deficit, Kass wrote today that he thinks the market has peaked for the year and investors should take profits.
While Cramer said he expects a correction, it won’t be on the level that Kass fears.
“There’s just not enough bad to trigger that kind of sell-off,” Cramer said.
Kass is the same analyst who called the Dow’s bottom at 6,500, so any statement he makes is worth consideration. But Cramer saw too many good things happening for the market to sink much lower than its present level. Housing has bottomed, auto inventories have thinned, inflation isn’t a threat, the job cuts seem to have stopped, and the big banks are doing well again. That means we’re less likely to lost the gains made since early March.
Cramer assumed we’d see the usual 3% to 5% pullback that follows any rush of market enthusiasm. He urged viewers to take profits as they make them, raising enough cash to buy stocks again after the dip.
“The market's gone from being too cheap to too expensive without more data changing the underlying economic picture,” Cramer said. But “there's no reason to panic, no reason to sell everything wholesale.”
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