Jim Cramer expects the decline in June to hold and mark the bottom
CNBC’s Jim Cramer said Wednesday that he believes the bottom of the bear market is in, suggesting that Wall Street’s June lows will prove to be durable floors for stocks.
The S&P 500’s close low this year came on June 16 at 3,666.77, when the broad U.S. stock index was down about 24% from its records. It has risen since then, up about 13% based on Wednesday’s close.
“I like where we are now,” the “Mad Money”[ads1]; host said, while acknowledging that the market may “test June’s lows,” because there are “a lot of reasons to be concerned.” However, he added, “I’m betting the market will bend, not break, through a tough September, and once we get through that period, the June low will hold.”
Cramer said he came to this conclusion based on what has happened outside of stocks. Specifically, he pointed to the fact that both the 10-year government yield and the price per barrel of crude oil peaked around mid-June as well.
- The 10-year Treasury yield hit an 11-year high of nearly 3.5% two days before the S&P 500’s June 16 low.
- West Texas Intermediate crude, the US oil benchmark, has also rolled over since early to mid-June, settling north of $120 a barrel on several days.
“Since the June lows, nothing has happened to shatter the illusion — or the reality — of a bottom,” Cramer said, noting that oil has remained well below $120 and “the vast majority of companies” that reported earnings in July and August. did well.” Indeed, he said there have been “very few true disappointments.”
“Without a spike in oil, which would cause a collapse in corporate earnings, I think the June lows will hold. Notice I didn’t say they should hold, I said they will hold. The trial will come when the Fed starts selling its own bond holdings with reckless abandon while continuing to raise interest rates. That could create a test of the September lows again, but I’m sure they will hold.”
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