TheStreet.com TV Recap: Fed Forces Flight to Safety

Cramer says Fed comments after good news destroys pin action.
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Independently, there has been plenty of good news in the market, Jim Cramer says. Oil is up close to $100 a barrel and

Hewlett-Packard

(HPQ) - Get Report

had a great quarter. However, nothing is happening.

The lack of pin action taking place is "the sign of a terrible market," Cramer said on TheStreet.com TV's Wall St. Confidential Web video Monday.

People could say that the market's oversold or that the banks have been cordoned off, he said. However, it seems that cordon has now been extended to the point at which people are thinking that while Hewlett-Packard may have had a good quarter, going forward it won't be good. Or that

Research In Motion

(RIMM)

, which Cramer said he likes very much, may not have a good Christmas because housing is weak.

Cramer's Diamond-in-the Rough Stocks

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"When you see this kind of negative pin action what it says is you must retrench again and be in safety, safety, safety," Cramer said. "

I'm talking about

PepsiCo

(PEP) - Get Report

,

Coca-Cola

(KO) - Get Report

,

Procter & Gamble

(PG) - Get Report

."

What investors are witnessing, he explained, is a belief that the good quarters are all previous good quarters, which is why they have no pin action. "People are taking their cue more from

Washington Mutual

(WM) - Get Report

and from

Centex

(CTX)

than they are from a Hewlett-Packard or a

Transocean

(RIG) - Get Report

," the latter two which he owns for his charitable trust,

Action Alerts PLUS, Cramer said.

"This is very worrisome because only in the worst markets do you not have stocks followed by leaders ... and this is one of the worst markets," he said.

One of the things that has been consistent in the criticism on Stockpickr.com, Cramer said, is that he said it was going to be a good year. If the

Fed

had kept cutting rates, it would have been a good year, he said. However, rather than looking at all the troublesome things in the market, the Fed has been looking at the inflation of oil and food.

The Fed, Cramer said, has made it so that when there is good news, "it counteracts and destroys the pin action."

"It's the Fed that is really causing the problem here and making people feel that every quarter is suspect," he said. "I have been stuck between whether they want the recession that's about to occur because they really want prices to come down, or they're oblivious." In either case, "the stocks that are working are telegraphing a severe recession and I think we have to own that ... by suggesting safety," Cramer said.

At the time of publication, Cramer was long Hewlett-Packard and Transocean.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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