Here's the problem. We are in no-man's land.
We are not down enough to create tremendous bargains, we are not up enough to say "OK, we've tested, we've bounced, we've held." In fact, we are at a level where, if you are a trader, it probably makes sense to sell.
Let's look at the issues.
- We have no idea what will happen in Turkey, but we know they don't either. That's dangerous because even though one day Turkey won't matter, for the moment it does because there are not enough people around who remember what happens with these kinds of declines. And there are enough people who know from Europe that the declines can spread here, whether they do or not.
- The emerging markets brainwashers are always telling people to be calm. But these aren't times to be calm. The currency traders who are trying to scalp a few extra interest points are idiots and have to have their positions sold from underneath them and be reassigned before the bloodletting is over.
- The futures spillover, as I write about in "Get Rich Carefully," exacerbates every bit of weakness and the sector ETFs transfers that weakness from the bad stocks to the good ones.
- High-profile themes like housing, autos, aerospace (with Boeing (BA - Get Report)) and retail are all being challenged here and are being found wanting.
- China lurks as a negative. What happens if we get a negative data point from China in the next 72 hours? You think we are on terra firma?
- Not enough companies have reported to be able to pick among a handful of the good ones. We need more companies to say that we are doing well.
- There's some weird exit from the wrong stocks, notably the recession stocks, and those are the ones that have to bottom first so we have to see the money come out of what it is bouncing into and go back to those stocks. I am sure there are some wise guys who are saying "our food and drug companies have made big inroads into emerging markets and now they are getting killed in those markets." The reason why these companies have made such big bets in these countries are because of birthrates. They have all dealt with currency controls -- witness Venezuela -- and they know what to do.
- We don't have enough of a decline in companies like Amazon.com (AMZN - Get Report) to play the bounce like we had the other day and that means the technicians will be out in full force telling us that we are going to go down.
- The technician I trust here, Carley Garner, traced out some levels that have me worried because if the first bounce level, down about a percent and a quarter from here, doesn't hold then the next level isn't close, notably 5% down from here.
- We are in the hands of what I call the "ideologists," those who literally think that everything is Fed-centric or Affordable Care Act-centric and the Fed has a new hand and Obamacare is actually really bad for many businesses -- AS IT WAS MEANT TO BE -- because the president wants companies to pay more because companies are the denizens, at least in his world, of the wealthy and he's trying to change economic inequality. Look, he never said he wasn't in favor of that change. Why get angry at him now? There was a party, the Republican Party, that didn't win in November 2012 and that's' all she wrote, even as the Republicans keep trying and failing to rewrite history.
I am sure there are companies right now that are buys. I want to ease my risk-reward and put it more on the side of an oversold bounce of companies I know are doing well. We aren't there yet.
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Patience is warranted, particularly because there are so many new people who have come in at higher levels who aren't that familiar with how the market works and might be tempted to blow out of stocks with a more severe decline.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.