There's lots of confusion about my upside blow-off call. People want to know why I have been selling stock if I believe a blow-off is possible and why I'm not just waiting until after the blow-off to make the sales.
Wrong!
The way blow-offs work is that they happen with lightning speed. You never would be able to sell enough as one occurred, so you would continue to offer up stock and get taken. Why bother to sell? Because the aftermath of a blow-off can be unfathomably bad, and you don't want to miss the chance to sell.
Understand, the people coming in now to buy are the people who are
desperate to be long. I committed a nice chunk of new change to my
Action Alerts PLUS account at lower levels. That turned out to be exquisitely timed. If you bought at lower levels, as I did, you want to be laying out stock all the way up into the panicked buyers who will, if history bears out, not be able to make a lot of money from here.
Don't forget, the market is also a great creator of its own problems. If Alan Greenspan looks at his stock screen, he might just change his mind and not give us the cut. If
Cisco(CSCO Quote - Cramer on CSCO - Stock Picks) rallies another buck, it might sell off when the company reports. If Harvey Pitt keeps
botching things, maybe the Senate won't go
Republican.
In other words, it is business as usual. I will
sell strength and buy weakness. This is strength, and I think that if you own stock you should peel a little here, and then peel a little more up another couple hundred points.
The takeaway:
Don't get caught max long at the top after a five-week rally. You will get spanked and spanked hard.
Enough said.
Jim Cramer
RSS
