Buy Carefully in This Jumbled Market

Rough stuff. Not the actual earnings -- the analysis of earnings. We have not one but two issues to concern ourselves with here: information overload and options expiration.

These are particularly difficult times. Remember, expiration always produces a down day at one point, and here we are. Watch the market at 2:45 p.m. EDT to see ultimate direction. I'll be there for you.

Let me give you the current schematic of my brain:

1. Hey, United Tech (UTX - commentary - Cramer's Take) great, must be options pressure.
2. The Altria (MO - commentary - Cramer's Take) quarter is terrific but we didn't get the spinoff so sell -- or is that a pin at $70?
3. Intel (INTC - commentary - Cramer's Take) sees demand strong for PCs, but Dell (DELL - commentary - Cramer's Take) and Hewlett-Packard (HPQ - commentary - Cramer's Take) are lower? I don't know why people hate tech all of a sudden, but isn't this precisely when you are supposed to buy? Yes, but the market says you are wrong. I think the market's wrong, at least today.
4. Don't people know that American Standard (ASD - commentary - Cramer's Take) is a breakup story, not an EPS story?
5. Can't people see that Johnson Controls (JCI - commentary - Cramer's Take) has to be bought on that great quarter? Doesn't matter, because they didn't "print" a much bigger number, even as it terrific.
6. Humana (HUM - commentary - Cramer's Take) opens up $5 on just a headline number? That doesn't seem to work.
7. CanPac (CP - commentary - Cramer's Take) subject to takeover speculation? Amazing.
8. Bear (BSC - commentary - Cramer's Take) didn't lose anything, so why sell it? But it is hated. Sell Goldman (GS - commentary - Cramer's Take)? Why would you sell Goldman? 'Cause people always sell Goldman. Gotta do more work, but why bother?
9. Nat gas goes up a penny and the nat gas group ramps? How in the heck does that happen?
10. The oils are up. Why bother to buy anything else?

In other words, it's a big, big jumble because we simply can't process it fast enough, and options expiration roughs up everything.

That's why I insist that people be careful during expiration week, looking for that down day, and it's why I have always contended -- backed up by empirical data -- that it is just too darned hard to win during earnings season. Last week I did a video with Rev Shark about this very issue. He's right. Too hard.

Don't try. Wait. Go buy Johnson Controls, go buy American Standard, go buy some oils? Seems right to me. At least get started and watch for the artificial declines developed by accounts selling the puts and calls.

For a refresher, particularly for the newbies and Stockpickr readers: If you own the July 70 calls on Altria, you don't have any real reason to hold them, the quarter wasn't that good. So you sell them. The buyer, typically a broker, buys them and buys the common stock because he wants to use the insurance of the puts. But then again, if you own the calls, they will probably go out worthless; no reason to jump on the stock. Guy sells the calls, the floor buys them and buys the common because they don't want to be short Altria.

Now put it all together: Put sellers cause upward pressure, because if you buy the put, you want to buy the common. Call sellers cause downward pressure, because that's like selling of common. The stock doesn't go down on that, though, because the dealers want to hedge by being long the common. They often even buy the puts.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. Click here to order Cramer's latest book, "Mad Money: Watch TV, Get Rich," click here to order his book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.

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