People love to talk about the straw that broke the camel’s back. I think an anvil broke the bull market’s back last week. A straw would never have done it because, until last week, I didn’t see a lot on the back of a bull that would cause a straw to do the job. But it seems like an anvil, a metalworking tool, could break anything, and that’s what it feels like is happening. Consider that until last week, we pretty much were excited about how bond yields had been going down even as inflation hadn’t crested. But by the end of the week, which ended with a big sell-off in Friday’s session , we were flummoxed by the decline in yields. Were they saying that the economy was weaker? Were they saying the consumer was weaker? Were they saying that the Federal Reserve better start cutting rates but can’t because there are still too many inflation indicators going higher? Were they saying get out of dodge and invest anywhere else — Japan, Europe or China — and do better than here? Perhaps the bond market saying all of the above, the anvil that lands on the bull’s back and really throws the poor guy for a loop. By Friday, it felt like the latter, didn’t it? Jeff Marks, the Club’s portfolio director, and I talk constantly. I prep my “Top 10” newsletter. We prep for the “Morning Meeting” together. Jeff preps for the afternoon Homestretch while I prep for “Mad Money.” On Friday, we took breaths while we were prepping and discussed that, for once in ages, our cash position had reached double-digit percentages and, at last, we could pick at some stocks if we would like. But what to pick at? We don’t like to buy a stock at the same level we recently purchased shares at. It does us no good to keep picking, say, at Disney while the stock still traded around $108 a share, roughly the same price it was on Feb. 11 when we bought more . We use the discipline of levels a lot. They keep us from buying too much at once place, which is always a mistake because if the stock goes down, you may have too big a position and can’t buy more. We are prepping for the market to go down so we can get some anvil clarity. On Monday, people on Wall Street are going to be all over everybody about what happened last week. They may ask: Why did the high-growth stocks get clobbered and the staid growth drug stocks actually hang in? I would say that’s the wrong read. Most stocks went down. Who really cares about the pile on into Johnson & Johnson ? We had a weak retail cohort following Walmart’s earnings report. We had weak homebuilders even though bond yields went down. We had terrible transports even as you would think that there would be dash to send things here before higher tariffs potentially kick in. The industrials also were terrible, even as we have no weakness in industrial America to speak of. I know that stocks are forward-looking, but they can sometimes do a really lousy job at predicting things, so I say so what? We just don’t want our stocks to go down, no matter the reason, including one that nobody seems to believe but is totally true: the weather. The most disturbing stocks in this market right now are the high-growth enterprise software stocks because they are drooping all over the place, and they are often the signs that there’s something wrong that no one wants to talk about. These are the stocks that, as long as everyone holds hands, we will be fine. ServiceNow , for example, is a famous hand-holder, and after a great spike to $1,170 on Jan. 28, it has now retreated to $938, and you pretty much expect it to go down these days as if something was really wrong with that last quarter . It wasn’t. Just no humongous beat and raise. It’s still well-loved by the analyst community, so what are these sellers doing? What is their problem? Don’t know that CEO Bill McDermott is killing it? Don’t they know if everyone holds on to the stock then these kind of pullbacks won’t happen? What’s with them? Then again, Club name Salesforce traded as high as $369 in December and now it is at $309.80. It reports on Wednesday, and even as I think it will be a big quarter, who doesn’t have a sense of foreboding about after last week? Enterprise software stocks trade like an exchange-traded fund. The pressure on Salesforce is gigantic and the bears, who are back and loaded for bear, know this. I think they try to take the stock down no matter what. How about Workday? Don’t bother. Do you think when Club stock Nvidia reports it will be any different? You think people have forgotten DeepSeek? That’s the Chinese startup that roiled the AI back in late January. Will they overlook the idea that Nvidia’s market capitalization fell by nearly $600 billion in one day on a poorly sourced company? I don’t think so. The quarter feels poorly set up. Its next-generation chip platform Blackwell is slow being installed in data centers, and the Chinese situation is not cleared up — both DeepSeek and U.S. export controls on AI chips — though CEO Jensen Huang was at the White House a few weeks ago meeting with President Donald Trump. Can you imagine what Nvidia will have to say to keep the stock up? Jayshree Ullal, the longtime CEO of Arista Networks , said everything right and yet a single line — a negative line about customer Meta Platforms , a Club name — kyboshed the whole shooting match. And now Arista stock keeps going down post-earnings. Can’t stop, won’t stop, even though it is actually the best of the best. There’s also Home Depot , which also reports this week. We have to deal with the idea that Home Depot is just an interest rate play, which means it can go down further even as the Club stock is already down more than $50 a share from its intraday all-time high reached on Nov. 26. I was hoping that when they report Tuesday, they might say business has picked up between the Los Angeles fires and the hurricanes. But I feel now that the weather will be asterisked against me. In some ways, a lot of quality growth stocks they look like they have already been savaged, and now we are talking about a second layer of savaging. What’s behind all of this? I think some serious buyer’s remorse. The Trump euphoria has faded into the Trump shroud as it turns out Trump meant it when he said he was going to use tariffs as a tool to get companies to bring manufacturing back to the U.S., in an attempt to help the working person. Wasn’t that supposed to be a promise easily broken? Looks like a no. The people who voted for Trump may have been unhappy with the Biden administration and inflation, but they weren’t unhappy with working. Employment is still very strong other than in government. If anything, Trump is going after the one part of the economy that needs the least help: manufacturing. We don’t have enough people to work in factories, though, certainly not in the new skilled factories. It’s as if Trump isn’t pro-business, big or small, but rather he’s in favor of companies who build here, period. What a great stance if we are going into a recession. What a quaint stance if this were the Nixon-Ford-Carter period. Now, at times like this, I always hear George Michael’s voice singing, “You gotta have faith.” I recalled leaving the office Friday wondering if all of this negativity was brought on perhaps by a vicious stocks-into-bonds rotation that has now run its course and it is over. We will come in prepped for more of the same on Monday, but maybe the same ended. That’s happened plenty of times. Or we could have Mr. Mercurial tell us that it is time to start talking tax cuts. Or we could have a day of calm where nobody in the federal government thinks they are going to be padlocked out of their offices, something that shouldn’t be impacting stocks but sure feels like it has started to do so. And Elon Musk. Nothing but headlines about Musk, seemingly 24 hours a day. We can’t do anything about it, so we sell stocks. I have heard crazier things. The bottom line is I have doubt, sowed by everything. What do you do when that happens? You keep your cash and you wait. You wait for the market to get oversold and others share your trepidation. Let them move first. Let them bail. We are minus 1.4 on the S & P Short Range Oscillator , with minus 4 signaling oversold conditions. Despite so many big declines, the major stock benchmarks are way too close to their highs to make a stand. That will come later and lower. Why be a hero earlier than necessary, especially when Palantir was down. If the sellers could get to the high-flying Palantir, they could get to anything. Meanwhile, equity futures are laughing at us, flashing green on Sunday night. What the heck do they know? Like war, absolutely nothing. Wait. Let it come in. If you have cash, lean to the buyside — not the downside — for some of the really damaged goods. That’s the plan. Don’t expect anything big, but we have done the selling we need to do. Now, we just need to do the waiting we need to do. And nothing else. (Jim Cramer’s Charitable Trust is long DIS, NVDA, META, HD and CRM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Traders work on the floor of the New York Stock Exchange during morning trading on Jan. 24, 2025 in New York City.
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People love to talk about the straw that broke the camel’s back. I think an anvil broke the bull market’s back last week. A straw would never have done it because, until last week, I didn’t see a lot on the back of a bull that would cause a straw to do the job. But it seems like an anvil, a metalworking tool, could break anything, and that’s what it feels like is happening.
