CNBC’s Jim Cramer said Wednesday he believes the bear market bottom is in, suggesting Wall Street’s June lows will prove to be durable floor for stocks.
The S&P 500’s closing low this year came on June 16 at 3,666.77, at which point the broad U.S. stock index was down roughly 24% from its all-time highs. It has rallied since then, up about 13% based on Wednesday’s close.
“I like where we are now,” the “Mad Money” host said, while acknowledging the market could “test June’s lows,” because there are “plenty of reasons to be apprehensive.” However, he added, “I’m betting the market will bend, not break, through a rough September, and when we get through that period, that June low will hold.”
Cramer said he came to this conclusion based on what’s happened outside equities. Specifically, he pointed to the fact both the 10-year Treasury yield and the per-barrel price of crude oil topped out around mid-June, as well.
- The 10-year Treasury yield notched an 11-year high of nearly 3.5% two days before the S&P 500’s June 16 low.
- West Texas Intermediate crude, the U.S. oil benchmark, also has rolled over since early-to-mid-June, when it settled north of $120 per barrel on multiple days.
“Since the June lows, nothing has happened that would shatter the illusion — or 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 fine.” In fact, he said there’s been “very few true disappointments.”
“Without a spike in oil, which would cause a collapse in corporate earnings, then 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 as they keep raising rates. That could create a test of the lows in September, again, but I’m confident they’ll hold.”
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