This market is still one sick puppy

There's a belief that stocks are too cheap right now. They aren't. When the Dow returns to 9,700, then let's talk.

By Jim Cramer Jun 29, 2010 8:28AM

jim cramerBy Jim Cramer, TheStreet


Down, boy, and stay down. Open down. Be down. Don't rally. Wash sellers out. Please.


There, I talked to this market like the dog that it is. We need to wipe out every last bit of optimism here about anything -- China, Germany, Europe in general and certainly the United States. We need stocks to go back down to reflect a collapse in Spain, the lack of a soft landing in China and a split-up of the euro.


In short, we need what took us to Dow ($INDU) 9,700 and S&P ($INX) 1,050, which is precisely where we are headed.


Last night, when I said that the market is too high and that it has to go lower, I was surprised by the outpouring of people who thought they heard me say the market is "overvalued."

I did. I said it. I believe it. We are in a mess here, and when I canvassed people for companies they like that are doing better than they were a few months ago, I could count the responses on one hand.


The market is too high -- unless unemployment comes down, Europe stabilizes and the Gulf oil spill is stopped. We haven't seen these things happen. Plus, last night people were saying we lost China, even though I think the sell-off was in advance of buying China's largest IPO ever, Agricultural Bank of China, a poorly run national bank that is more of a risk factor than a positive.


The only good news here: If we keep going down and Friday's employment number is horrible, at least we won't go down as hugely as we would have otherwise. That's some silver lining.


The fact that the market is opening down big will no doubt create some bargains. But to take advantage of them, you must believe employment will be robust on Friday. It is not like the old days, when you got a weak number and the Fed cut rates. Now you get a weak number and you get 1934 bond yields, because throughout this period, the undercurrent is deflation, dramatic deflation.


We have the most money in cash for Action Alerts Plus that I can recall. We have levels that we will buy at, but we were far from those levels Monday. We will be at those levels today. We have waited and waited, and we will not pull back from buying when we get them. We will pull the trigger.


And I still believe Dow 9,700 holds. We will be very oversold at that level. It will reflect all of the negatives except systemic European risk.


But the pain will be great, and the rebound muted, because it's just a really bad market that cannot get out of its own way and falls on its own weight, whether a company is doing well or badly, whether it needs marking up or doesn't and whether it is likely to have a good second-quarter report or not.


The market is just too high, and there is still too much belief that it is too cheap.


It isn't.


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.


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