An End of Forced Selling Eases the Pressure

What happens if all troubled hedge funds simply shaft their investors and collectively stop redemptions? What happens if they raise money with new funds to buy bad positions, a la Citadel? What happens if the market rallies enough to take off the selling pressure on these funds?

I think that's what you are seeing. Last week we saw two things happen: 1. The hedge funds simply stop redeeming on Friday, and I think that's the effect of some funds just totally shafting investors, and 2. We saw the pro-ultras, the ETFs that get around the margin rules, have so much money come in to them in between 2 and 3 p.m. that there was no way they could not put a huge amount of futures money to work on the long side at the end of the day.

I think this "end of hedge fund" selling, simply by force majeure, is incredibly bullish for the market. If you can just tell investors to go to hell, then the forced selling which has claimed virtually every oil, copper, machinery, fertilizer, rail, steel, iron and coal company can abate here just in time for the new stimulus package.

Should we be buying Chevron (CVX - commentary - Cramer's Take) and Potash (POT - commentary - Cramer's Take) and CSX (CSX - commentary - Cramer's Take) and Ingersoll-Rand (IR - commentary - Cramer's Take) and Arch Coal (ACI - commentary - Cramer's Take) here?

No.

What you can do, though, is buy the S&P 500 if the forced selling is done, because the lack of selling will make things better for equities, even if it turns out that the fixed-income market is still collapsing. When I see the oil futures up big as they are today I know that hedge fund pressure from that group will diminish and Exxon Mobil (XOM - commentary - Cramer's Take) can go back to its leadership role. It astounds me that natural gas isn't lifting here. That group and the commodity remain under huge pressure.

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At the time of publication, Cramer was long Chevron, Johnson & Johnson and Wal-Mart.

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