Which is a more effective predictor of the day's action: a coin flipped by a non-
referee or the
overnight futures? The answer: the coin.
Every morning I come in here early and the futures weigh heavily on the market. How heavy? Try end-of-the-world heavy. This morning, at 4:40 a.m. EST, the futures were down the equivalent of about a 75-point decline.
Talk about a great way to make the market look awful. The underwater futures get mentioned a dozen times each morning on
, and they create an atmosphere of doom and gloom from the get-go.
And then regulars come in and the market moves closer to fair value unless someone really important goes negative on the market or a bunch of companies have blown up.
Why does this happen? One reason is that some people always want the market lower, and a little Globex futures selling can go a long way toward creating an atmosphere of gloom. People have been playing this game for as long as Globex has been operative. It is very effective.
Second, these futures are hostage to Europe. But Europe has not been an accurate predictor of our market -- at all.
So when you come in on a morning like today and the futures are signaling the end of the world, do yourself a favor: Forget about them until the opening. Or better, flip a coin. If it is heads, the futures will be an accurate predictor. If it is tails, they will be wrong.
That's all you need to know.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. 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 TheStreet.com.