Cramer says the inventory market appears dangerous, however that is OK: ‘We’re churning to discover a backside’
CNBC’s Jim Cramer advised investors on Friday not to overreact to the stock market’s move to the downside in September.
The “market looks bad. That’s OK,” Cramer said on “Squawk on the Street.” “What’s happening, I think, again we’re churning to find a bottom.”
Cramer’s comments came shortly after Friday’s mixed opening.
As of Thursday’s close, with four trading days left in the month, the Dow Jones Industrial Average declined 5.7% in September. The S&P 500 slid more than 7% and the Nasdaq pulled back 9.4% for the month.
Cramer noted that September is a historically difficult month for Wall Street. “The last 10 days of September have historically been bad. It’s going to be even worse this year.”
The S&P 500 averaged a decline of 0.5% for the month since World War II, according to CFRA research.
However, the tech-led September swoon is not necessarily a bad thing, the “Mad Money” host said. By contrast, he sees it as a positive sign, in light of the comparisons flying around in recent months that likened the stock market’s robust rally from coronavirus-era lows in late March to the dot-com bubble of the late 1990s and early 2000s.
“This is what’s really important to the people were getting very negative. It takes 1999 off the table,” Cramer said of the September pullback, which has been particularly pronounced in many of the megacap technology stocks, such as Apple, that helped propel the Nasdaq to a series of record highs this summer. Apple, as of Thursday’s close, was down over 19% from its record closing high on Sept. 1.
“We never had this [decline] in the year leading up the Nasdaq crash,” said Cramer, who has been skeptical of drawing parallels between the coronavirus rally and 1999. Back then, the Nasdaq went pretty much straight up in late 1999 until its then-peak of 5,132 on March 10, 2000. The Nasdaq bust was more than 2½ years in the making with losses of over 78% before the index reached a then-bottom of 1,108 on Oct. 10, 2002.
In July, Cramer said some of the stock moves were “crazy.” But he added then, “Can we please just stop comparing it to 1999? Because in 1999 a lot of really bad companies gained a lot of market cap. Here, a lot of unbelievably great companies are gaining market cap at a pace that you’ve got to give them a speeding ticket.”
In fact, now that some of those large technology stocks have pulled back — basically, they’ve finally been issued that speeding ticket — Cramer has urged investors to take advantage and buy the drop. “As someone who turned bearish on these tech stocks weeks ago because I felt like we were getting greedy … I say the tech downdraft now seems like an opportunity,” he said Monday.