Market pattern shows shades of 2000

If I'm right, we'll all have to deal with a phenomenon that is just getting started.

By Jim Cramer Apr 4, 2014 11:53AM

Image: Stock market report © ULTRA.F/Digital Vision/Getty ImagesIs it a collar? Is it a basket? Back in 2000 -- the operative period I am now using for the new tech portion of the Nasdaq -- I used to see the pressure on the whole "complex" like I saw Thursday, and I had a sixth sense of what was going on. I knew someone was getting short or getting hedged against some Internet-dominated positions.TheStreet.com logo


I knew it because of TheStreet (TST). You see, I had made a declaration that I wasn't going to sell any stock into the downturn. Didn't seem right to me. I said that after the lock-up had expired and the stock had come down horrendously from its high the year before. The numbers are so embarrassing but oh, what the heck, you could look them up. The stock was priced at $20, opened in the $60s because of the craziness at the time and then proceeded to go down to the low single digits, where other insiders were still selling.


The brokers, always clever, were telling me that if I didn't want to sell TheStreet stock, they could lock me into a short basket of similar stocks. They said that they could offset my downside. They had come up with other stocks that traded in similar fashion to TheStreet and it would be easy to bet against them to cut off my downside.


I think Thursday was basket day, either for some insider or for some hedge fund. Or for many insiders and many hedge funds that either saw their gains evaporating or wanted to play the downside of a group that had become hapless and weak after having been viciously powerful.


That's how you get remarkably horrible performances from stocks like Salesforce.com (CRM), Workday (WDAY), Veeva (VEEV), Concur (CNQR), ServiceNow (NOW), Facebook (FB), Yelp (YELP) and the like. They all trade together, so they were a natural basket for some entrepreneurial broker to put together.


That can also explain why they didn't and couldn't lift. You can't stop the process in between. The brokers putting on these baskets are indifferent to the declines they are generating, because their only job is to finish the job. That's why it simply didn't matter how low the stocks went. It didn't entice buyers, because has you stepped up and bought, you would have been overwhelmed and gotten a report that was much higher than where the stock was at the time.


This kind of activity went on all the way down in 2000. It never stopped. It was like a hidden cancer that operated on all of the stocks at once. I don't think I would have ever understood it was happening, however, if I hadn't been pitched it.


Sure, it's possible they'll bounce. There were natural sellers everywhere betting that a strong employment number would cause these stocks to get crushed again, because the money needs to go into leveraged old tech with earnings and not unleveraged new tech with insider selling.


But if 2000 is in play -- and I think it is -- someone is now short or hedged against a crash landing for the group. And we all have to deal with a phenomenon that -- if it is like 2000 -- is just getting started and was nowhere near complete at 4 p.m. EDT Thursday.


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Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio and uncover the stocks Cramer thinks could be winners. The portfolio is long NOW and FB.




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44Comments
Apr 7, 2014 10:16AM
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Gee, I don't see the parallels...   I cannot find 100's of NASDAQ issues with PE's over 50...


The only bubble in the market is the artificially high PE's (18-22 range) boosted by the FED creating money, and it having to go somewhere.  Is the market overpriced?  Yes, but only due to the FED.  PE's and PROFITS remain strong, even if their increases are mostly due to real inflation.


The market will adjust for the FED's printing and rising interest rates.  


Remember, in every disaster, their is  opportunity.   The Lifeboat salesman had a great day April 16, 1912...

Apr 6, 2014 7:14AM
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When we as a nation (forget global anything) look at what the "Tech Era" has created and what it takes for real people to sustain from their own efforts-- commonsense more than suggests that we are not growing an economy out of this. Facebook is an addiction. Twitter is a click clique. Amazon isn't replacing zillions of small businesses with anything sustaining, it's just draining the life out of small businesses after Wal-Mart compromised them off Main Streets. 
A demand-reliant society fails by it's own inability to supply itself. The real issue at hand is balance. We cannot afford unsustainable technology, so website platforms that replace real people in real jobs making real income that appears to be the reason these sites can't sustain-- is lunacy. There needs to be a real workforce and an oversight that says-- that website compromises more than it brings to the table. Close it and go back to your fry cook job at McDonald's. 
If the average home rent is $1,200 and $8 hour for a 40 hour work week only yields $1,388 gross pay per month (8 x 40 x 52 \ 12) then we are an unsustainable economy. We don't need more techno-anything and absolutely all of it-- publicly-traded... is a disaster of it's own making. Buying shares of hot air and button pushing is as stupid as it comes. 
Now... back to global. There is more than $1 Quadrillion now in outstanding debt, almost all of it spent on a gigantic techno-train wreck. Sell your stocks, invest the proceeds where you live and grow your own local economy out of it. Disagree? Fail to see value in it? In the months ahead is catastrophic failure. THEN is too late to change your course. NOW might be enough if you hurry. It doesn't add up. It never added up. We were lied-to about globalization. 
Apr 4, 2014 10:27PM
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The market was down over 150 points today and there is hardly any mention of it.  However, had it been up even 25 points and the media would be saying how the market "surged" or " soared".  This is all bullsh@t.  Are there any financial writers out there who are willing to do the research and report the truth or are they nothing more than puppet heads for our government driven media?
Apr 4, 2014 1:08PM
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So last week Romney, cheney and all the other righty israeli ball likkers were at the "republican jewish convention and behind closed doors all they could joke about was bombing iran ....."evidently the joke was 2 down 1 to go.."

You can't help but wonder why they find it acceptable to send American boys and girls to die in wars that profit the israeli right !  I suppose they know none of their kids will ever be on the battlefield so its ok to make money from the aipac/likkudi scum that buy our politicians...

Romney & Cheney -- what was it 10 deferments between the 2 of them.

like  that one barry?

Apr 5, 2014 10:34PM
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Too bad............most of these posts are as nonsense-laden as the article.

So what's the recommendation from Angelo Mozilla's biggest but-kisser?

Whadya say Jim? Put all my cash in the vix? 

Apr 4, 2014 3:32PM
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My Goodness, stop back after a nap and snack, and Markets go kablooyee ...

What the hell happened??

Must have invited the scumbags over for lunch...They killed the NAS..

Lucky if the DOW holds up a 100 for the week.

The NASQ only loses 20..

And S&P about 10 to the plus side, no where near 1900 now..

But the RUT, small caps holding onto a gain of about 30 points for the week...

Have a nice weekend...

I'm thinking it's about time to go to a Casino, got some "free play" and a lunch or dinner...yahoo !

Apr 4, 2014 12:26PM
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Good points Jim.   We the older crowd actually look forward to sharing your experiences as we experienced the finality of 2000 as well.  Every person has a different take and perspective depending where they are in their investment lives.  We older folks spend time talking about death and how to plan and prepare for it much like you are talking of selling and minimizing risk.  The younger folks aren't interested in talking about wakes and plots just like the young folks in the market today who haven't experienced the implosions markets can have and consequently what we are seeing aren't really interested either because as yet it means nothing to them.  Education is very expensive in both time and money.
Apr 4, 2014 1:00PM
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Btw cramer ...do you like it when your old "ball cupping buddy" ...abs shows up to defend you ?  Is he one of your family members ?  Are you "italian" too ??


Apr 4, 2014 1:29PM
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Yeah what is it with Retired Marine.?? Is he psychotic or have a "split personality"..??


Been seeing him/her post elsewhere, and in the replies he calls himself a name or says something degrading about himself....?


Then I believe he/she says that the other has "hi-jacked" his screen name...

I have trouble following all that gibberish..

Maybe they write all that bullshidt to just throw Barry or DLH  off....?

Apr 4, 2014 12:33PM
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I understand why barry equates "vaginas" with sh*t as evidently when he was born the surrounding medical staff said what the f is that that just popped out of that lady ....his fathers (nobody was sure which one was the dad) ...collectively uttered ...."i don't know but it looks like sh*t"....

:)
Apr 4, 2014 1:44PM
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Well we started out pretty decent this morning and all the forecasts were for an up day...

Economic indicators all looking okay and comparing to guidance.. U/E although not great still holding steady...

Guess the moneychangers decided to take some profits for the week about noontime.

And we go for a little ride South..


Although for the week the DOW, will rise about 150 points..

The NASDAQ losing maybe 10-15 points....

And the S&P hitting new record territory on a daily basis, should at least be up 10-15 per the week.

Reaching within about 5-7 points of 1900 on intraday highs.

Not a bad week..

Apr 4, 2014 6:58PM
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pretty good analysis JC ... STRONGLY suggest that everyone watch the cnbc interview with Jim Chanos - just google "Jim Chanos Ultimate Bubble Indicator." imho this was one factor that actually moved the markets today.

 

and buckle your chin straps for the long train wreck ... it took 18 months last time around ...

Apr 4, 2014 12:35PM
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Actually barry as I told you before I am a Scottish/Irish catholic ....I think if you look carefully at your son and daughter you will see they are the "sand nggrs" ...put them next to Abdul and Samir the pool boys your wife employs and you will see they look nothing like you !!!  :) 
Apr 4, 2014 12:36PM
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Very good categorization Barry.  I think I would rather spend my time with a broke beggar queen than a drunken racist repetitive meathead like yourself.  Was Archie Bunker your real father? If one cared to listen they would see and hear the old bald headed Racist ba$tard coming out in you very clearly.   So Meathead was your brother in law right?  If you had the ability to recognize good advice you might change your posts a bit as they are becoming way way too repetitive. Just Sayin meathead.
Apr 4, 2014 12:35PM
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Btw Barry don't you love the President now there is talk that one of your heroes - anti-American Zionist scumbag jonathan pollard may be released to appease the pails???? 

I guess it confuses you israeli righty fascists .....
Apr 4, 2014 12:20PM
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If the article was written on Thursday wouldn't he have written "I saw this today..." .????

Mentirosa, mentirosa...pantalones en fuego ....  :)
Apr 4, 2014 12:19PM
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This is hilarious - Bobo was bullish on wednesday and we get 2 down days -- he may have a "sixth sense" but the first 5 don't work ....

He says "hew saw this Thursday" and then dates the article at the end " 4 p.m. EDT Thursday." as if he is prejudging today's market.

Wouldn't stand up in court bobo - didn't your master alan dershovitz teach you how to lie properly ?

Apr 4, 2014 2:50PM
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Well barry ...I hope you enjoyed your Shish Kebab and Chowder  lunch at Abdul the Turks on 4th and Farckqew and let's hope you didn't choke  ...

I am off for a fun weekend in Capitola and then Monterey .....if you have any teeth left after indulging for so long in your favorite pastime feel free to stop by and I can knock them out for you.

Congratulations on your Fluffer of the Year award again and remember when you are at Home Depot picking up mexican fellows to "work" at your house - if you pay them you commit a crime !! 

Cheers dooshbag ..... :)
Apr 4, 2014 12:28PM
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Welcome back Barry ....May I be the first to congratulate you on your "Fluffer of the Year Award" at the Tel Aviv Gay Porn Oscars awards event last week.

I understand it is an unprecedented 10 win for you and this year the other nominees were all your family members.

Your mom wife was quoted later by Variety Tel Aviv complaining .."It's not fair as he fluffs for free as it is his favorite pastime while we are trying to earn a living.
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