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NEW YORK (
) -- "Two down days does not signal the all clear," Jim Cramer explained to his
TV show viewers on Wednesday.
The said the patterns of old no longer work in this market, which means investors need to remain on the defensive.
Cramer said in the old days, two big down days in a row, like we saw on Monday and Tuesday, would be the crescendo moment for the markets and would almost certainly usher in a multi-day rally. But that was back when U.S. markets were in control of their own destinies, said Cramer, and those beliefs are now too risky to rely on.
In recent years, the markets have seen seven back-to-back selloffs, with two coming so far this year. The Oct. 3 sell-off was indeed the spark that ignited a terrific October rally, but the prior one on Sept. 22 only yielded a bounce for several days before the markets quickly retreated, noted Cramer.
That's why while he likes the tech stocks and the rally in truck production and many of the retailers and restaurants, Cramer remains hesitant to signal the "all-clear."
Why is this the case? Cramer said it's because this week's sell-off really didn't create a lot of bargains in high quality stocks, and while some things are better in Europe, others seem to be getting worse. He said the U.S. employment numbers due later this week could be a disappointment and the risk of another false positive remains too great.
Cramer said the markets remain a 50/50 coin toss at the moment, which is why he was not telling viewers to buy into today's rally, even though he knew it was coming.