The Rhythm of the Selloff

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The rhythm of the guru has changed in the last few years. I saw it first during the October selloff, and the pattern was repeated in Tuesday's action. It is instrumental to understanding the pace and velocity of the selloff, so let's go over it.

In the October selloff,

Barton Biggs

gave his salesforce a heads up that he was headed to the fallout shelter before the opening. His "morning research call" read terribly as it was communicated to

Morgan Dean Witter's

clients and scared all but the most braindead or titanium-bred traders. That knocked the market down over 100 points. Then he followed up with a midday conference call where he talked about nuclear winter and gave a picture that reminded me of the Lincoln Tunnel scene in

Stephen King's

The Stand

. That sent the market down another 150 points.

But the Big Kahuna didn't come until Biggs came on

Ron Insana's

afternoon show and shouted fire after locking the exits. Nasty. We saw this same cycle yesterday. The market opens down because

Ralph Acampora

goes negative to his salesforce. By midday he has his conference call, where he goes over his newfound negative rap in a kind but, and I have to use this word, "frightened" way.

The market then rallied as professionals said, "gee he didn't have that much" on that call, in fact, indicating that perhaps we could be putting in a bottom.

But there he was back on Insana's afternoon show, no caveats this time, just saying forget about 10,000, we are going lower. No silver lining; no bottom in tech; just apologetic fear and panic.

Boom, we knock off another 150 points.

Do you see a pattern?

Conference call to salesforce; conference call with clients; afternoon


poleax to drive home the point and scare retail. I never want to judge these cycles. I just want to point them out. They are vicious but obvious. Expect this pattern in the future and respect it and you will be able to handle these down days better. That's my only point.


Random musings:

Interesting action: The futures were up seven points when I walked in, which would be negative as I said last night. They are now up 1, which is more with the program I

outlined. But remember, anything but down, a la the day after Biggs' 500 decliner, gets us nowhere....

James J. Cramer is manager of a hedge fund and co-chairman of

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 by sending a letter to at