NEW YORK (Real Money) -- Is it a collar? Is it a basket? In 2000, the operative period I am now using for the new tech portion of the Nasdaq, I used to see the pressure on the whole "complex" like I saw yesterday, and I had a sixth sense of what was going on. I knew someone was getting short or getting hedged against some Internet-dominated positions.
I knew it because of TheStreet (TST). You see, I had made a declaration that I wasn't going to sell any stock into the downturn. Didn't seem right to me. I said that after the lock-up had expired and the stock had come down horrendously from its high the year before. The numbers are so embarrassing but oh, what the heck, you could look them up. The stock was priced at $20, opened in the $60s because of the craziness at the time and then proceeded to go down to the low-single digits, where other insiders were still selling.
The brokers, always clever, were telling me that if I didn't want to sell TheStreet stock, they could lock me into a short basket of similar stocks. They said that they could offset my downside. They had come up with other stocks that traded in similar fashion to TheStreet, and it would be easy to bet against them to cut off my downside.
I think yesterday was basket day, either for some insider or for some hedge fund. Or for many insiders and many hedge funds that either saw their gains evaporating, or wanted to play the downside of a group that had become hapless and weak after having been viciously powerful.
That's how you get remarkably horrible performances from stocks like Salesforce.com (CRM), Workday (WDAY), Veeva (VEEV), Concur (CNQR), ServiceNow (NOW), Facebook (FB), Yelp (YELP) and the like. They all trade together, so they were a natural basket for some entrepreneurial broker to put together.
That can also explain why they didn't and couldn't lift. You can't stop the process in between. The brokers putting on these baskets are indifferent to the declines they are generating, because their only job is to finish the job. That's why it simply didn't matter how low the stocks went. It didn't entice buyers, because has you stepped up and bought you would have been overwhelmed and gotten a report that was much higher than where the stock was at the time.
This kind of activity went on all the way down in 2000. It never stopped. It was like a hidden cancer that operated on all of the stocks at once. I don't think I would have ever understood it was happening, however, if I hadn't been pitched it.
Sure it's possible they'll bounce. There were natural sellers everywhere betting that a strong employment number would cause these stocks to get crushed again, because the money needs to go into leveraged old tech with earnings, and not unleveraged new tech with insider selling.
But if 2000 is in play, and I think it is, someone's now short or hedged against a crash landing for the group. And we all have to deal with a phenomenon that -- if it is like 2000 -- is just getting started, and was nowhere near complete at 4 p.m. EDT yesterday.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long NOW and FB.
Editor's Note: This article was originally published at 7:48 a.m. EDT on Real Money on April 4.