Net Stocks and Broken Rabbits

This sure felt like a bottom, the trader thinks.
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Crescendo? Sure felt like it. Right after I

wrote that I covered my shorts, I went in to buy stocks, and like a classic V-bottom there wasn't anything for sale. Nothing. Nada. I had to pay up to buy stocks that you couldn't have given away a few minutes ago. That's a crescendo. That's what a bottom should feel like.

How do these things happen? How does it turn just like that? Let me give you a behind-the-scenes scenario of what I saw. First, today, like every day, the market started up, which initially was a false signal. This time the shorts were ready. They pounded and pounded and pounded the Net stocks, buying puts, shorting the stocks, getting ready for still one more fleece-'em session.

Then the market swooned as margin clerks sold stock for people who were hung. But somewhere, at some point in some firm, the margin clerks finished. The forced selling that the shorts were all going to shoot against finished.

That's when I wrote the piece that said I am covering my shorts. That call sure paid for a lifetime's worth of subscriptions. I saw the selling stop. I just didn't hear any flow to go. I did hear stock to buy, however.

When this kind of thing occurs, I call it the broken-rabbit effect, something I once saw happen at a Deep South dogtrack. As in all races, hungry greyhounds were chasing a mechanical rabbit that whirs around a fence. But this time the rabbit broke off. The dogs went nuts. They stopped in their tracks and jumped on the darn thing, ready to kill each other for a piece of it. But it was mechanical -- it wasn't there to be eaten.

That's what I saw the shorts do when the supply dried up. They all jumped for the same stock. It wasn't there to be eaten. At that point a frenzy began much like the dogs on that Southern track. And it was just as unrequited.

Of course, when the shorts scrambled and couldn't cover longs were emboldened and we ramped in crescendo style.

Each session is like each race at the track with this market. If the employment number is benign, I suspect we ain't seen nothing yet to the upside. If it is crummy, we give back what we've gained.

There goes Swifty.

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.