How are the markets looking?
Jim Cramer said--both on TheStreet Live and in his Real Money column--that he thinks that this market has room to run.
"Where did the sellers go? What happened to them? Far too often we don't reflect on where the sellers went to. Remember this is a market of stocks and you need buyers to pay up and suppliers to vanish for a market to roar as it did Monday," wrote Cramer in his Real Money column Tuesday morning.
"I have some theories about why we can go up with such ease and they all revolve around the disappearance of sellers, which is more important at this moment than the strength of the buyers," he continued. "First, and most important, there's an absence of initial public offerings. I don't think the average investor or the newer trader, understands the pressure the IPOs can apply to the stock market. The whole process of bringing a stock public involves finding people who want to buy stock on the deal but also buy stock at the opening. Every real offering involves a substantial capital commitment. Most big accounts can't get a lot of stock on what's going to be a hot deal unless they put in for a huge amount of stock with a soft commitment to buying more when it opens. Given that they get a huge slug at the very low opening price it's only fair that they buy a lot at an extended price because the average will still be so much better than the run-of-the mill buyer."
"We have had 484 IPOs this year, which is 680% more than last year when we had only 62. That's a gigantic amount of supply. You must imagine that big firms have had to let go of a massive amount of stock to get these new deals. They weren't getting new money in so they had no choice but to sell. And sell. And sell," Cramer wrote.
Recap TheStreet Live: Everything Jim Cramer Is Watching Tuesday