Sunday, September 28, 2008

Cramer Again

Last Friday, Sept. 26th 08, Jim Cramer suggested that the Dow could lower to 8,000; thereby implying that the market will likely rally in the near term future, probably the next few weeks. As average mainstream investors make up the typical CNBC audience demographic, the winning edge lies against all proposed by seasoned network personnel.

Nature of Cramer

There is absolutely no incentive for Cramer to help the average CNBC audience. Instead, he gets paid by sponsors pushing their agendas. In this case, it is likely that Cramer’s handlers look to do some bargain hunting, and they want improved liquidity from the uninformed crowds.

Current sentiment too negative

In the past couple of weeks, much of the frantic selling from uninformed, scared investors have already liquidated. Historically speaking, the more fear investors feel, the more likely markets will rally in the immediate future. Panic quantified points to volatility; today, the VIX (implied volatility for S&P 500) or VXO (Implied Volatility for S&P100) are at significant highs.

How to play this

For the next several weeks, keeping in mind that big money intends to buy; taking only long positions in the equity markets would provide a slight winning edge. Just keep in mind that regardless of how cliché “Buy Low/Sell High” may sound, it is the only way to survive this game.

0 Reflections: