Monday's reversal in the stock market could be the beginning of a rebound for the large oversold, said Jim Cramer of CNBC, as stocks rebounded from their falls in the week of Thanksgiving.
"That is the crux of this movement," said the host of "Mad Money" when the Dow Jones Industrial Average published its best day in more than two weeks. "In this bear market in particular, we have had three significant declines where the oscillator has gone below minus 5, and each time, the sales became too aggressive and there was approximately a rebound of 5 percent."
Then, according to the story, the movement is not over, Cramer said. Even so, investors "should never confuse a rebound with a sustained movement" higher, he said, reiterating his call that the stock is still in a "bear market".
"We could raise another 3 or 4 percent before the oversold bounce runs out," Cramer said. "But, please, never confuse a rebound with a sustained movement, because the only sustained movement that we have seen since the crisis at the beginning of October has been a sustained movement to the downside."
But there are four things that could prolong the increase, said host "Mad Money." First is the trade with China, which now depends on the scheduled meeting of President Donald Trump with Chinese President Xi Jinping at this week's G-20 summit.
"I say do not get your hopes up," Cramer said, pointing to the Trump administration's hard line on China's business practices. "On the other hand, anything can happen in a couple of days of smiles, including a possible suspension of the execution of trade in the 25 percent tariff that is supposed to come into play in January if we do not get some kind of agreement." .
Second, oil prices could reach their lowest level thanks to a slowdown in drilling in the United States, where falls in the price per barrel have made it less profitable for oil producers to extract the product due to the shortage of available pipelines, Cramer said, citing the latest Baker Hughes account with the platform.
"If the producers cut the drilling and oil prices find some kind of new equilibrium at these levels, … that would be quite positive for the stock market," he said when oil prices stabilized. "It means lower prices on the pump. [and] it gets some redundancies in the red-hot energy industry, something that will make the Fed less likely to keep adjusting. "
Third, Federal Reserve Chairman Jerome Powell will speak publicly on Wednesday, and if he even hints he is willing to review the data after the December interest rate increase expected by the Federal Reserve instead of increasing the Rates on the autopilot in 2019, will pay off. actions, said Cramer.
Any sign of this type "would be seen as pure gold by the market," he argued. "If we get a prudent statement from Powell … based on declining commodity prices, slower housing [and] slower cars – thank you, GM, for the gigantic layoffs before Christmas – that would ignite a brief and vicious squeeze. That would be the other 2.5 to 3 percent. [rally] That could happen. "
Fourth, the resolutions on the Brexit and Italy's budget crisis could provide a final stage for the market, said the host of "Mad Money." Progress in any of the situations could lead to a weaker US dollar, which would increase profits abroad for global companies based in the United States.
"Here is the end result: we have a respite from rally, especially if Salesforce.com gives us a good number tomorrow and a good forecast when we report," he said. "There are some genuine positives that some real optimists can hang on their hats."
Disclosure: Cramer's charitable trust owns shares in Salesforce.com.
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