CNBC’s Jim Cramer said Wednesday that he thinks a bear market bottom is inland, suggesting that Wall Street’s June lows will prove to be a permanent floor for stocks.
The S&P 500’s lowest closing level of the year came on June 16 at 3666.77, at which point the broad US stock index is down about 24% from its all-time high. It has since climbed, up about 13% at Wednesday’s close.
“I love where we are now,” said the Mad Money host, while acknowledging that the market could “test June lows,” because there is “a lot of reason to be concerned.” However, he added, “I bet the market will curve, not break through, during the month of September, and when we get past that period, that June low will hold.”
Cramer said he came to that conclusion based on what happened outside of the stocks. Specifically, he referred to the fact that both the 10-year Treasury yield and the price of a barrel of crude oil both exceeded mid-June.
- The 10-year Treasury yield hit an 11-year high of about 3.5% two days before the S&P 500 low on June 16.
- West Texas Intermediate, the US oil benchmark, has also been rolling around since early to mid-June, when it settled north of $120 a barrel in several days.
“Since the June lows, nothing has happened that will break the illusion – or reality – of the bottom,” Kramer said, noting that oil remained well below $120 and the “vast majority of companies” reported earnings in July and August. I know very well.” In fact, he said there were “very few real disappointments.”
“Without a rise in oil prices, which would cause corporate profits to crash, then I think the June lows will continue. Note I didn’t say they should hold them, I said they would hold. The trial will come when the Fed starts selling its holdings of Bonds with reckless abandon as they continue to raise interest rates. This could create a test of the lows in September, once again, but I am confident they will hold.”
open an account now For the CNBC Investing Club to keep track of Jim Cramer’s every move in the market.