On Wednesday, TAUT’s Jim Cramer told investors that there are several things that need to happen for the market to have a “bull market in a bear market” situation.
“We’re going to have rolling bottoms like we had rolling tops. As long as you know how to identify the signs, you’ll be able to spot them ahead of time and figure out how aggressive you should be and how much money you can eventually win,” the “Mad Money” host said.
“As for the broader averages, I’m one of the few people who honestly believe that we could have an entire bull market in a bear market situation, but only if we get specific signal signs,” he added.
Shares edged lower on Wednesday after gaining the day before, showing market volatility as investors grow fearful of a possible recession.
Here is Cramer’s list of signposts that will indicate the long-term market recovery:
- Oil prices must stabilize at levels beneficial to producers and the public
- Rampant food inflation must end
- The unemployment rate may need to rise to 5% for a few quarters: “That would reduce demand and give us some breathing room in the fight against inflation,” Cramer said.
- Investors must stop engaging in speculative trading
- The lead-fall line needs to improve: “This is a very important indicator that measures the overall breadth of the market – how many stocks are going up versus which are going down. When you see it steadily increasing , it’s a solid precursor to a run,” he says.
- Stronger, more established companies need to merge with newer, “junk” companies
“You get all of that, you’ll see the bears run and interest rates will fall. But without them the market remains a house of pain,” Cramer said.