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Turning Down the Volume on Volume and Volatility

Cramer says these two tired nonindicators are what the mute button was made for.
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Volatility and volume have to be the two most overexposed nonindicators in the book. I say "nonindicators" because something can't be an indicator if it indicates



All day long I hear and read about people bothered by volatility or light volume. They seem to think that despite what you see on your screen or believe may be happening in the corporate world, what matters are the two V words. They will then pronounce those two Vs as alternately heightened and dangerous or sluggish and dangerous.

When you hear these things, remember, you are hearing authentic Wall Street gibberish in its worst form. Sometimes in my wildest -- fortunately I have a wife who monitors these -- fantasies I envision coming on television and wringing my hands about the two Vs, making sage-like pronouncements and dire forecasts based on them and then getting up and saying, "Everything I just said was made up. These nonindicators are simply efforts to bore and obfuscate you and to kill time between the next '


to raise rates' story."

For as long as I have been in the business, the market has been about three things: earnings, supply vs. demand of stock and interest rates.

If earnings are going up, stocks go up. If earnings are going down, stocks go down. If companies do better than expected in a truly surprising manner, their stocks go up. If companies do worse than expected -- top or bottom line -- they go down. If there is too much stock for sale, stocks go down. If there are too many buyers, stocks go up. If interest rates go up big, the other stuff doesn't matter, as bonds become too competitive compared to stocks. If interest rates go down, stocks are more attractive vs. bonds.

There, in that one paragraph, is a no-nonsense description of what really moves the markets. When you hear other discussions about other indicators remember this: I keep every single indicator possible, and I haven't made any money with anything but that paragraph. For years now.

That said, put yourself in the shoes of someone who has to generate around-the-clock news about stocks. You are standing on the floor of the

New York Stock Exchange

, the camera whirs, the cue is given, you are live and you say:

Ron, there is nothing going on here today except a few more buyers than sellers. (That, of course, is for when the market's up; when it's down, simply substitute in "a few more sellers than buyers.") Traders here are worried whether their wives or husbands will yell at them if they grab a pop before going home, and some are concerned also about whether the Clemens trade is as good as we think it is. There is also collateral concern that it might rain -- or worse, freezing rain -- as some of the players here forgot their warm coats while others need mitten clips.

Yeah, that's not going to happen.

So instead we have to hear about volatility and volume. Guess that's what the mute button's for.

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