Commodities Distort the Market Picture

Can you lose every commodity and still go higher? Can the market afford to have a steel and natural gas and copper crash? Does it mean that a worldwide slowdown will wipe out everything?

I am a bear on commodities but feel that to have no exposure to them is a mistake, because right now there is a buyer's strike by the most important commodity market in the world: China.

It seems as if China has just disappeared, and with it the bid underneath for all sorts of commodities. Today it turns out we are getting the first price cut in steel, and I guess that is the first of many, as Arcelor Mittal (MT - commentary - Cramer's Take) is the biggest, and they put it through.

I simply cannot, however, afford to be bearish when the most important determinant of future prices - long-dated not short-dated -- is inflation. Short term, we have earnings to worry about, and from the looks of things, the only earnings stories that have upside are those from the consumer companies that react well to a fall in energy prices.

And there are enough producers of energy and minerals in the S&P 500 that when they collapse, they can really hurt the market more than the stocks that benefit from it. I felt today had a margin-call feel to it, as if there were a huge margined Gustav bet by people using ETFs and whatever else was out there, and it just collapsed, taking the accounts doing it with them. The fact that you could not get a lift in the Oil Service HOLDRs (OIH - commentary - Cramer's Take) even as you got a lift in oil told you that.

I reiterate that both extremes of this market were wrong today, but the natural one, the one that is the banking index and the housing index, BKX/HGX, one that finished up nicely, is the real deal, and the oil stocks were oversold by the margined players.

Random musings: Ingram's (IM - commentary - Cramer's Take) guide-down was really the only negative today that mattered for tech.

At the time of publication, Cramer had no positions in stocks mentioned.

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