Jim Cramer says the market will not bottom until it sees a ‘booming’ moment

CNBC’s Jim Cramer said on Tuesday that the stock market will not bottom until sentiment reaches its lowest point, similar to how stocks rebounded from the historic fall fueled by the coronavirus last year.

“A year ago, we hit a strange bottom when the market experienced a change of guard, with Covid winners taking the lead,” said the host of “Mad Money”.

Exactly a year ago, the shares were sold at an unprecedented pace, pulling the S&P 500 benchmark down 35% from its peak in February in a matter of weeks.

A year later, the S&P 500 jumped 82% from its lowest point on March 23, 2020. But sentiment has changed, Cramer said, with many of the pandemic’s biggest winners lagging behind the market in the year so far.

“Now we are being dragged down by a similar change in leadership and, although I know we will eventually hit bottom, it may be a while before we get a crescendo this time,” he said.

All major averages declined by around 1% in Tuesday’s session.

The Nasdaq Composite fell 6.7% from February’s highs, as the index’s shares retreated amid the reopening of trading. The Dow Jones Industrial Average is 2.4% below its March highs, while the S&P 500 is within 2% of its all-time highs.

Cramer compared a moment of “booming” in the market, when the sale of shares reached a climax, to “a discordant synonym, and the instruments break until reaching a beautiful conclusion”.

He suggested that we are moving on to another, although less severe than last year’s collapse.

“That’s when a sales tsunami swept weak hands and the market hit rock bottom, except that, unlike a symphony, many of us didn’t realize it was happening,” he said. “Since last year, we have had a great race, but now the market is running out again.”