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Market euphoria is coming to an end after Wall Street was overtaken by rampant speculation, CNBC’s Jim Cramer said after stocks fell sharply on Monday.
“Once the speculators are blown away… and stocks that are already falling sharply start to recover, then we can find a tradable bottom,” said the host of “Mad Money”. “We’re close, but the speculators haven’t been completely crushed yet.”
On Monday, the Dow Jones Industrial Average fell more than 700 points, making its worst day since October as all 30 stocks in the index slipped. The S&P 500 and the Nasdaq Composite both fell more than 1%.
Cramer suggested investors start looking for buying opportunities in stocks that have already suffered a 10-20% pullback. He also recommended investors add bank stock to their portfolios after the group was hit, despite the publication of strong results.
“I think you are watching speculators blow themselves up in the kingdom, as pandemic actions return and the big manufacturers try to bottom out,” he said. “Rails, non-Boeing aerospace games… and infrastructure stocks all make a lot of sense here because they are down” from their highs.
Cramer, however, pointed to a silver lining in the oil business. Oil speculation has slowed considerably, he said, after OPEC agreed to increase production over the weekend.
West Texas Intermediate crude futures fell below $ 70, a key level, for the first time in more than a month. US oil would end the day at $ 66.42 a barrel, down more than 7% for its worst day since September.
Without the deal, Cramer predicted oil could have hit $ 100 a barrel.
“The crude collapse is actually good news for the wider market… it means lower costs for everyone,” Cramer said. “Plus, at these levels some of the best oils are too good to ignore. [like] Chevron with a yield of 5.6%. “
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