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NEW YORK ( TheStreet) -- It's not the direction of oil prices and interest rates that matters, it's the velocity, Jim Cramer said on Mad Money Wednesday as he opined on the market's strong snapback rally on positive comments from the Federal Reserve and a stabilization of oil futures.
Cramer explained that the markets understand the U.S. economy is improving, which, in turn, means interest rates will eventually need to move higher. What the markets don't know, however, is when exactly that will happen. That's why today's positive comments from Fed Chair Janet Yellen gave the markets a welcome breather from their seemingly endless worries.
Off the ChartsIn the "Off The Charts" segment, Cramer went head to head with colleague Bob Lang over the direction of overall markets, given the continued decline in oil prices. Lang first looked at a daily chart of West Texas Intermediary (WTI) crude since June of this year. He noted that there's no doubt that the trend is not your friend when it comes to oil and it shows no signs of changing anytime soon. But does that necessarily mean that stocks will follow suit? Lang was not convinced. This is not the first time oil prices have seen big declines. In fact, Lang noted that it happened in 1986, 1991, 1993, 1997 and 1998. Yet, during all of those years, where oil fell around 30%, the S&P 500 managed to post gains between 10% and 33% by year's end. This time is likely to be the same, both Cramer and Lang agreed. Eventually, the linkage between oil and stocks will be broken, but it hasn't happened yet. Must Read: Fed Has a New Way of Telling Investors That Rates Will Remain Low
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