The market was right all along

There's a reason stocks kept rising last week: China's revaluation of the yuan.

By Jim Cramer Jun 21, 2010 8:19AM

Jim CramerBy Jim Cramer, TheStreet

 

The market knew something, all right. That persistent bid underneath that we all sensed, we all felt, turned out to be dead right.


I thought it might be because the euro was holding. Or because the Spanish banks had at last broken the backs of bearish investors. I thought it might be that employment is getting stronger -- or, more likely, has to get stronger -- because some companies, like General Motors, aren't doing their usual furloughs. I thought it might be the final financial regulation rules and how they wouldn't be that onerous.

 

I didn't think it would be China, because I already checked off the Chinese recovery box last week -- one of the key props I needed to see before we could leave the 2010 bear market behind.

 

The market's real smart.

 

In all the press coverage this morning of the yuan revaluation, there are two elements. First, this is a really big deal because China is going to keep domestic consumption going while cooling exports. Second, it's not a big deal at all because it's only a 3% float.

To me, the former is all we need to think about right now. We are nearing the end of the quarter, and many companies are totally defensive. All last week I wrote about how we were rallying because the double-dippers were putting money to work and those who expect a worldwide resumption of growth were putting money to work. But even bigger than those streams were the ones on the sidelines -- those who wanted out.

 

Now I expect that money has to come in, because the quarter is almost over and these doubters must at least look like they are convinced that something good is happening. So they will buy. The defensive buyers might have to switch their buying, or just buy more industrials with the cash they have.

 

Either way, not enough people saw this one coming, and even though we are wildly overbought -- more than plus 7 on the oscillator -- the buying now will be panicked, except by the persistent bidders. They don't need to panic. They got it right. Or, to put it another way, the market was simply not as perilous as we thought.

 

At the time of publication, Cramer had no position in any stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Related Stories

3Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

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.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
284
284 rated 2
461
461 rated 3
671
671 rated 4
628
628 rated 5
618
618 rated 6
615
615 rated 7
495
495 rated 8
347
347 rated 9
115
115 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

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.