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Supply vs. the Bull

Any snapback rally will be muted by too much supply -- but the trader has a plan regardless.
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Sure you want to be contrarian. You want to buy into the negativity. You want to be the smart, smiling guy in the sea of gloom. I don't blame you. Makes sense. Maybe it even works a little.

But there is one problem: supply. Right now secondary issuance this year is running 20% higher than

all of last year

in the Net sector. $27 billion! (Thanks

Morgan Stanley Dean Witter

for those numbers.)

I am harping on this

supply theme because supply is the enemy of the bull. It is what makes the bounces anemic. It is what makes the snapbacks lack snap.

In all of the other downturns, we didn't have this much supply to absorb. It is unprecedented. Which means we won't snap back hard this time. Which means that strength must be sold for the wacky stuff with the supply problems, not bought. That's our plan. That's what we will be doing.

Where is there no supply?

Procter & Gamble

TheStreet Recommends

(PG) - Get Procter & Gamble Company Report

.

Bestfoods

(BFO) - Get BlackRock Florida Municipal 2020 Term Trust Report

.

General Electric

(GE) - Get General Electric Company Report

.

You get the picture.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long General Electric, Bestfoods and Procter & Gamble. 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.