A Rally Based on Nothing

That's a hard type of rally to play, Cramer says. But this morning, the collective hedge fund world had to act.
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The Fed's put us back into that Big Bad Event world again. That's the mindset where the hedge funds of the world buy puts in advance of what may be bad news and then have to blow those puts out when the bad news doesn't occur.

So this morning, after we dissected the data and realized that the Fed would not take action on this number, the collective hedge fund world had to take action. The predictable rally on information that normally would not have been good enough to trigger a rally then occurred.

These types of rallies on the basis of nothing are so hard to play. We reached for the drug stocks, but after a brief attempt to take stuff everybody else wanted, we gave up. We hunkered down on some of the slow cosmetics names instead. They lack the pin action of the drugs, but they are easier to buy.

And we think with this number past us, we have passed back into a benign period for all but tech, which has become show-me because of Y2K.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.