Regaining Control of the Ball

The bulls need to hear that the consumer is cooling.
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We're always searching for signals that something has changed. We took heart in the rally of the financials, betting they're not lying in predicting a slowdown. We gathered that the action in Anheuser-Busch (BUD) - Get Report was a tell that the economy is shifting into lower gear. While we wish no ill-will on great cyclicals like International Paper (IP) - Get Report or Georgia-Pacific (GP) or Dupont (DD) - Get Report, we don't want to hear about price increases sticking because the Fed doesn't want to hear it.

Which is why we were ecstatic about the possibility that the last four weeks of the quarter for

Costco

(COST) - Get Report

were weaker. That gave us hope that maybe the consumer was cooling. If the consumer cools, the Fed won't have to put on 100 basis points of tightening. That's the message the bulls need to regain the ball.

Why do we care so much about stuff like this? Because we're always trying to figure out whether moves like the one we saw on Wednesday are simply head-fake short squeezes or something different and better.

On Monday we had a big selloff and a rally, which made everyone feel that Tuesday could be better. But what was so good about Tuesday? What was so different? Nothing. We hadn't shaken anybody out Monday, as the volume was low and there wasn't a lot of put buying. That made Tuesday's session totally bewildering. In fact, I think Tuesday was probably the most disheartening session of the post-April 14 selloff. It was brutal and debilitating and led a lot of people to give up. Hence the large volume Wednesday.

We stuck to our discipline and made sales of the stuff we had put on into Tuesday's selloff. But we are inclined to think we're further through this selloff than we were in April. By the end of the day Tuesday we had more of our capital committed than on any day since April 17, and we didn't feel like our hearts were going to jump out of our throats.

Again though, all of that

Cisco

(CSCO) - Get Report

holding $50 and the

Nasdaq

holding some sort of trend line and

Intel

(INTC) - Get Report

bouncing again won't mean jack if the Costco story is just anecdotal and there's no real slowdown. Which is why we anxiously await the

GDP numbers and next week's

National Association of Purchasing Managers'

survey and

employment figures

as more of a real thing than we've had in some time.

Random musings:

People keep saying, "Why don't you call it a bear market already?" Remember, I am not a broker. I'm a hedge-fund manager. It's my job to buy stocks that go up and sell stocks that go down. If I thought, "Hey, it's a bear market," I would have missed

Bestfoods

(BFO) - Get Report

,

General Mills

(GIS) - Get Report

,

Philip Morris

(MO) - Get Report

and

American Home Products

(AHP)

. If I thought it was a bull market, I wouldn't have shorted some of the real losers out there that made us good money. I will do nothing that blinds me to the next big hit, no matter how much some of you would like it to happen! (LOL)

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long American Home Products, Cisco, General Mills, Intel and Philip Morris. 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.