Bulls Can't Capitalize on China

Despite another big jump and some crazy action in the last few minutes of trading, it was a very disappointing day for the bulls. After a bounce on Friday, the bulls had a big economic stimulation in China to serve as a catalyst, but after a gap-up open, we had selling all day.

Volume was very light, which is a slight positive on a down day, but the technical picture is becoming precarious at best. We are still above the October lows, but they are in sight and acting like a magnet.

One of these days we will hold the lows and start building a base from which a rally can emerge. It is still possible it will happen here, but the big mistake is to anticipate that it will. We need the market to prove that it is buyable rather than just hope that it is. Too many market "professionals" base their investment strategy on trying to guess when the market will finally bottom. They are usually far too early and end up with big losses that they then have to recoup.

The smart individual investors can wait until the market actually proves itself before they put their precious capital at risk. There is absolutely no reason right now to act as if the market can't go lower. The trend is firmly down and the technical pattern not positive. Maybe this is the start of a bottom, but it is too early to act like it is.

Have a good evening. I'll see you tomorrow.

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Know What You Own: Dragging down the market on Monday were losses in General Motors (GM - commentary - Cramer's Take), Goldman Sachs (GS - commentary - Cramer's Take), Allied Capital Strategies (ACAS - commentary - Cramer's Take), Clear Channel Outdoor (CCO - commentary - Cramer's Take) and Nexstar (NXST - commentary - Cramer's Take).

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.