Beware this thin, treacherous market
Don't buy any stock unless it is already down big.
By Jim Cramer, TheStreet
No bids. Nothing. Yesterday morning's persistent bid just disappeared. The buyers of individual stocks -- who seemed to like them so much at the opening -- totally disappeared, as if this were a gigantic game of three-card monte.
Of course, once we took out the key S&P ($INX) support levels, there was no one underneath, because the only buyers of any size would have been people who were buying because it held. And they, of course, were sellers when it didn't.
This is the thinnest market I can ever recall. It isn't the worst, just the thinnest, and that makes it totally treacherous.
The market is forcing you to do several things:
- Don't buy more than even a fifth of a position at once, as opposed to a quarter, which would be my usual amount.
- Widen scales considerably between buys: a 3-to-5-point scale on what might have been a 1-or-2-point scale.
- Don't ever buy any stock unless it is already down big. A flat stock is now too dangerous to buy.
- Don't buy more of a stock unless it is down appreciably and the market has fallen appreciably from the last buy.
Otherwise, don't even bother.
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As the market wades through what many people hope is a sixth bull year, some have grown nervous about how long the run can go.
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