I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15….. Bye, bye bear market. Say hello to the bull and don’t let the door hit you on the way out.
– Jim Cramer, last night (Wed July 30), on his “Mad Money” program on CNBC
Jim Cramer led off his “Mad Money” show on CNBC yesterday evening with a bold, 12 minute long monologue declaring an end to the bear market. It’s worth listening to and you can watch it here.
He reviews five reasons why he thinks the bottom is in with the primary one being the extreme pessimism among investors. Apparently he had dinner with a bunch of money managers on Tuesday night and the bearishness really stood out to him. He also cites the most recent Investors Intelligence Survey showing 30% bulls and 50% bears.
Interestingly, legendary technical analyst Martin Pring made a similar argument for extreme pessimism marking a bottom in his quarterly letter a couple weeks ago: “Time To Be Optimistic”, July 17, 2008. He cites the 28-year low in consumer confidence and how such lows have market bottoms over the last 30+ years. Check out the chart on page 2 of his report.
On the other hand, it’s also worth remembering that Cramer suggested the bottom might be in after the Bear Stearns bailout. See, for example: “An End To The Bear Market?”, Friday March 21, 2008 and “A Turning Point”, Sunday March 23, 2008.
I don’t think so. I think the July 15th intraday low of 1200 on the S&P marked an intermediate bottom in the same way that the intraday lows on August 16th, 2007, January 22-23rd, 2008 and March 17th, 2008 did. In time, it too will be broken to the downside.