The Game Gets Tougher

After the 500-point gain going into earnings season, investors panic at anything short of perfection, Cramer says.
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Rough waters. Collectively, people seem to want to take money off the table. Any table. Tech, drugs, cyclicals. What suddenly got in the market?

I think that the 500-point rally into earnings priced perfection into the market. So, if there were any worries, any mistakes, we were ripe for the hammering. Still are.

The game is tough here, in part, because second-quarter numbers can often be the best numbers until the fourth quarter because of summer slowdown issues. Before you wander into a tech stock down on weakness, remember that the third quarter is rarely a blowout one in this business.

What are we doing? We just bought

Microsoft

(MSFT) - Get Report

back, as now it has given back the tracking-stock gain. I thought the quarter otherwise was just fine. Could the stock go lower? I hope so. I want to buy more.

We are also buying some

I-Beam

(IBM) - Get Report

, since the excitement has diminished but the businesses remain strong.

The market is in a profit-taking mode. (And please see my

piece last night about

Exodus

(EXDS)

and greed for more on that.) If it keeps up all day, we will begin to build up the process of having the bears come out and tell us that the world ended Monday when Microsoft didn't rally on that better-than-expected number.

That's why I've maintained a large cash position. That's why I am putting it to work in this decline.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Microsoft. 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.