Can the market maintain the momentum?
Here are 6 themes that we need to go right for Thursday's reversal to last.
So what has to go right to maintain the momentum that started last Thursday with that amazing reversal? What has to go right to prove that was indeed a "whoosh bottom" (as the late, fabulous Mark Haines called it), where everybody who needed to sell has sold and buyers are at last attracted to the market?
First, we need interest rates to stabilize, or to go up at a slower level, as the economy recovers. The employment report Friday was slightly better than expected, which could provoke a gentle rise in rates. Ideally, we want them back down, which is something that's hard to get if the economy is improving. But secondarily, we want the velocity of the move to abate. You can't have a rapid surge in rates without havoc occurring throughout the system, which is exactly what happened in the last month, when rates exploded higher even as they remain historically low.
You want to see us go back to new highs? Then we need to get interest rates back to where mortgages are below 4% so sidelined potential homebuyers can say, "Thank heavens, I didn't miss the bottom and I have to move now or I will never get another chance like this to buy." That would put us back on course for a prolonged housing recovery and all that goes with it. Still, though, just a cessation of the huge jump higher could do the trick.
Second, we have been getting some better-than-expected data from Europe. That's shocking in itself, but it confirms that not only has Europe bottomed, but it might also be showing actual improvement. So many of our companies have huge businesses overseas, and this would be a godsend for them.
Third, we need to see some stabilization in China. Europe could really help here because they take so many Chinese exports. For that to happen the potential trade war between China and Europe over solar panel dumping needs to be nipped in the bud.
Fourth, we have to get a sign that all is not lost in retail land. We got some hope when Gap (GPS) reported a good month, which showed us that Ascena (ASNA), Vera Bradley (VRA) and Francesca's (FRAN), three huge disappointers, might actually be outliers. After all, Gap is a gigantic nationwide chain that has a real good handle on business that these three other companies simply don't have. We will hear from PVH (PVH) this week. This apparel company is in every major department store and it provided continued momentum with a good report.
Fifth, we need to see some stability in commodities to verify that things around the world are getting better, not worse. I rely on iron ore, copper, aluminum and most important, lumber as signposts of improvement or deceleration. All of those have been terrible performers of late -- except lumber, which just started advancing. That's a terrific sign but the others need to follow.
Last, we saw our leadership groups come back: aerospace, transports, techs, banks and biotechs (TheStreet) -- the latter being the most visible sign of a better market. If those continue to build on last week's advance, we have a fighting chance to say that we've seen the bottom and that the worst case scenario's off the table.
So those are six themes to watch for. Unfortunately, we need all six to go right if we are going to get back to where we were before the selloff began. But I would say four out of six would prove that the pivot we saw on Thursday was, indeed, a whoosh bottom. And that means, point blank, that the worst is over.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust has no positions in the stocks mentioned.
More from TheStreet.com
Freddie Mac created a LLC to buy all the foreclosed homes and sold them to themselves. They were reported to Washington as homes sales. This must be the housing recovery ! LOL The books are cooked. The market is pumped up by the Feds.
Well the Traders,Scumbags, got their 2#s of flesh this morning...
Ran a lot of decent stocks down enough to get a 2% swing on the out and buy back in..
This shidt really gets old, if you can't get in on the Game or don't have the money to play..
Yeah the PPT came in and did their thing...
But they are not outsiders..They are within and frantically pushing the buttons and pulling levers.
Of course the market trend is going to continue.
The market trend of downward spiral that has been halted in the short term by huge outlays of cash from Bernanke into the stock market.
Look folks it is a simple equation. 10,000,000 new retired baby boomers each taking on average $40,000 a year out of the stock market instead of putting in $5,000 plus a year. Vs 1,000,000 new minimum wage jobs created a year that will not be putting any new money into the stock market.
Sooner rather than later the baby boomers will drain the stock market of all the cash there,
And Bernanke is merely delaying the day of total collapse by his infusion of cash into the system which is distorting the truth about the ponzi scheme.
V_L....You posed the question, was I taking "advantage" of the Market's demise earlier this a.m.
Not really, because I've got a partial sell order trying to fill and the price has been dropping the last couple days.
And a limit buy order cancelled yesterday, because of instructions and the price has climbed the last couple days until this morning...
Seems like an Honest man, can't make a trade or money; No matter what they do !
Maybe we would be better off trading for dimes and nickels, like HFT platforms do...
But the small amount of cash on hand right now..Won't buy many shares in $60-70 stocks.
The whole World was down before "our open", even commodities...
That normally doesn't bode well for our Markets, when we were part of the problem..
Doesn't really matter about the scumbags and manipulators, they are all dressed in "chicken little" costumes...
i swear if the fed would raise their base rate even .25% we'd see an anouncement as if someone said "game on".
the corporations don't worry about the cash. they either have it or can get a loan anyway. most regular people can get the loans as well.
Ran into an old real estate salesman at the course yesterday. Asked him if this was going to last. He went off at me about watching Fox News and yes everything was going to the moon. He was soo aggresive with big eyes and very excited. Said he had a buyer from Sweden looking at a two million dollar home that had 5 assessments in one day on it. Reminded me of the attitude so many had 7 or so years ago. So we go back to that for what again? I see many folks acting like teen agers looking for a free ride to the concert. Somehow I just don't see the reasoning behind the whole thing. We need good jobs for young folks to build futures on. You know like Clinton promissed when he touted Free Trade. That is how you start Real Estate down a healthy path.
Some Indian Tribes or Nations, have festivals, reunions, get togethers and the such..
Included in the celebrations are sometimes displays, drumbeats, and "stomp dances."
Kinda looks like they are Stomp Dancing on Wall Street today...
MIRAGE GUY:You`ve got the same old rant about the 85 billion.Don`t act like you`re
objective.We all know you hate Obama and are constantly wishing for a depression
to blame on Obama.We will havea market crash,when we get a Republican president.
Then you`ll find a way to blame Obama.Sorry you missed the bull market.Remember,
1% on CD`S is fine for you.Read it and weep.
DLH2448;Just stating facts pal.One day doesn`t make a market.It`s come back today
from down well over 100 points.I`m making a ton of money due to this administrations
policies.Sorry you`re not doing as well as me.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.