Underestimating the Power of the Rally

Cramer bemoans missing a 15-point uptick.
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Bottoms get formed in strange ways. They tend to be when you least expect them. In this market, the amazing thing is that when you get a bottom, whether it holds or not, the rewards are simply spectacular.

Let's take

Exodus

(EXDS)

. I think this company has a pretty bright future. No matter, I was short a little coming in. Why? Because it was one of the few companies I could actually get an uptick for, allowing me to be short. (You can't short a down stock. You can't force a sale on. You have to wait until someone is willing to pay you more than the last trade, or an uptick as it is known in the biz.)

When the stock was down five, I looked at Jeff and said, "I have no edge on Exodus, I am going to cover." Nice trade. Booked four points.

But did I go long? If I knew enough to cover, why did I not know enough to go long? Exodus subsequently rallied 15 points. All my life I have wanted to catch 15 points. That's a huge move. I had it in my grasp, but I didn't pull the trigger. I underestimated the power of the rally, short covering or not, and didn't think other than to cover.

If you are short and you know to cover, why not go long a little in an oversold tape? I know the next time I see this pattern I will. I will force myself to do it. The reason I am writing this right now is to force myself to do so. In this tape there is too much opportunity when things turn not to do so.

Random musings:

The bond market pissed me off Thursday. Here I am focusing all of this energy on productivity and some flight-to-quality rally occurs that obliterates the importance of a really bad number -- and that number this morning was bad -- and takes the bonds up. That stuff must just drive

James Padinha

, who is as disciplined as they come, totally nuts. That's not much solace, though, cause I really like the guy.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. 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.