Many people have to sell. No one has to buy.
Wrong! Dispatches from the Front: Deconstructing the Bull Case By James J. Cramer 9/1/98 8:47 AM ET
The Bull case. Let's just make it. The dollar, after all of that jabbering, is back to where Rubin intervened. Victory for the four or five yen bulls. Japan -- tastes great, less filling. Someone, a la Niederhoffer, got liquidated in the last hour of yesterday's trading, and the selloff was exaggerated by that. The Fed is going to ease. Everything was overdone.
Okay, let me pull that apart. I have not heard of the liquidation, and I have my ear to the ground. Until I hear about that dead body, I am not buying it. No one has gone bust that I know of. I would be much more bullish if I knew it to be the case.
The Fed? Sure, at 6500, they will be in the case. I am counting on it. At 7500? No dice. They just can't. That wrecks the soft landing the Fed wants.
Japan back? Oh, for today. And I like the action in the dollar. But Japan coming back? Can we wait for something to happen positively over there before we like it?
Against that is the following: Many people have to sell. No one has to buy. If the market were lower, courtesy of a less bonkers futures pattern, we could have room to operate. But I am supposed to buy Dell ( DELL:Nasdaq) at 106, where it is trading right now? I am supposed to take that 99 offering in Microsoft (MSFT:Nasdaq)? Oh, yeah, I am supposed to step up to the plate in Nokia (NOKA:NYSE ADR), which I am short?
I don't think so.
Random musings: You are XYZ hedge fund. Your whole livelihood is on the line. You need the market up so you can liquidate at better prices. You take $50 million that you don't have anyway and you bounce the futures as high as possible so that you can liquidate a billion-dollar portfolio up a couple of points higher and save $250 million. That's a fabulous trade. That's what I think you are seeing.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At the time of publication the fund was long Microsoft and short Nokia, though positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to TheStreet.com at letters at thestreet.com.