This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Cramer's 'Mad Money' Recap: When Progress Isn't Good

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.






NEW YORK ( TheStreet) -- Not all progress is good for mankind, Jim Cramer told his "Mad Money" show viewers Tuesday. He was responding to a recent report by the Chicago Federal Reserve that acknowledged the threat high-frequency trading represents to the individual investor.

Cramer said that genetically modified seeds were once touted as "progress," but now the country is rejecting them in favor of all-natural, organic products. Nuclear power was also praised as "progress," until the Three Mile Island and Fukushima disasters convinced people otherwise.

So it should come as no surprise that high-frequency trading, the kind that caused the "flash crash" and almost bankrupted Knight Capital (KCG), is in the same situation.

Individual investors understand there are risks associated with investing in stocks. There's a sense of "acceptable risk," said Cramer, and investors can wrap their heads around things like the events that caused the dot-com collapse of 2001 and the financial panic of 2008, for example.

But when it comes to high-frequency trading, individuals have no idea what they're up against. The algorithms are far too fast and far too powerful for even the most seasoned of investor to understand.

Unfortunately, the Chicago Fed is not the agency to do anything about the problem, said Cramer. Only the Securities and Exchange Commission can make changes like reinstating the uptick rule to limit short-sellers or ban the double- and triple-levered exchange-traded funds that serve no purpose other than catering to the high-frequency crowd.

Thus our market system will continue to sacrifice integrity and transparency in favor of speed and "progress."

Off The Charts

What is the market's next move? Cramer went "Off The Charts" with his colleague Carolyn Boroden to find out, as the duo looked into the chart of the S&P 500 for clues.

Back on June 12, in the middle of the European-induced doom and gloom, Boroden made a bold call that the S&P had indeed bottomed. Her target for the S&P at the time was 1464.

That's why it pays to listen to the "hot hand," said Cramer, because the S&P 500 shot past Boroden's target earlier this week.

1 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,173.90 +41.93 0.24%
S&P 500 1,994.96 -4.02 -0.20%
NASDAQ 4,542.7770 -9.9820 -0.22%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs