The Market Is Cheap, but Stocks Are Still Pricey

Here's a bizarre point: I don't know a bear. Not one. The conventional wisdom is that it doesn't matter how bad things are, it's totally reflected in the market, and the market is "cheap."

I totally agree with this consensus, that the market is "cheap." The asset class is cheap.

But the stocks aren't cheap.

I will repeat that ridiculous judgment: The S&P 500 is dirt cheap. The actual stocks in the market are very highly priced.

This was the last good quarter for virtually every company I follow. The last good one.

The earnings estimates haven't been brought down nearly enough.

The estimates are presuming good growth.

The estimates are totally wrong.

On an individual basis, that's not nearly as important as money flows and the valuations.

So we get situations like U.S. Steel (X - commentary - Cramer's Take). The negativity was thick around the quarter. The downgrades were heavy. But the stock had gone from $196 to $28, and unless the company loses money, I can't get behind the thesis that it will take out $28.

But do I buy it at $38?

No, I sell it.

I buy it back at $30, a little higher than its bottom.

That's what I want to do, because I do not have an earnings case to buy it here.

I do not have a dividend case to buy it here.

I just have a "futures" case -- people buying the asset class -- and a technical case -- we are going to hold that bottom.

It leaves me scaling out as usual and buying lower.

That's the only plan that works. Again, I reference that such a plan is Doug's plan. I am just agreeing and selecting individual stocks that fit the pattern.

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

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