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Forced selling by hedge funds is behind the late-day market volatility these days, Jim Cramer told the viewers of his "Mad Money" TV show Thursday.

He fears we may never see a bottom until the selling comes to an end.

Cramer said many hedge fund strategies have just been dead wrong, such as the betting on a Chinese recovery after the Olympics that failed to materialize. As evidence, he used the Baltic Dry Shipping Index and the Shanghai Composite Index to graphically show how much China's economy has slowed.

The result of hedge funds gone bad is forced selling, he said. At around 2:45 p.m. each day, hedge funds begin preparing for the next day's round of redemptions by liquidating their ill-conceived positions.

These billion-dollar liquidations, in turn, wreak havoc on the markets, causing huge late day declines and subsequent snap-back rallies. "These funds are getting killed," he said.

Cramer also blamed on what's known as "fund-to-fund managers," middlemen between the large hedge funds and their clients. These managers, who typically take a 1% to 2% commission for their services, often pressure funds for immediate redemptions, forcing managers to think only for the short term.

Cramer doesn't expect this trend to end anytime soon. Even worse, he expects to see a pickup in mutual fund selling about the time many investors receive their October statements and realize the magnitude of their losses. "This is when people will really start pulling their money out," he warned.

Until then, Cramer said this market hasn't bottomed yet. "Until the only ones left in stocks are the ones who never sell, we won't find a bottom," he said.

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