How confident were we four weeks ago, when Jack Ma told us he watched Forrest Gump to be humble ahead of the Alibaba (BABA - Get Report) IPO? How confident were we that Russia would be tamed, or that Ebola fears were overdone, or that ISIS would eventually be stopped? How confident were we that a little decline in oil would be good for everyone? How confident were we that the hapless Treasury Department couldn't stop inversion deals, and there were a ton to come in the pipe?
How about too confident?
We always seem to forget at moments like this that major business decisions like stock decisions hinge on confidence. Think about the times in the last few years when we lost confidence in the political system. What was the result? How about a wholesale repeal of major percentages?
How about when we lost confidence in the banking system? That was a time of tremendous dread.
How about when we lost confidence in our ability to balance the budget and got a debt downgrade? Or how about when we figured that European governments were going to default and all was lost? Or when we thought that Fukushima would never be brought under control and we could all get radiation sickness?
Every one of these times caused panic, and in retrospect, the bottoms were reached at a point when we were devoid of all confidence.
You have to ask yourself now, are we at that moment? Don't we need more incidences of Ebola to lose total faith in the CDC before something positive occurs? Didn't they tell us to expect that? Don't we need the Russians to take some violent or vicious actions against the West before we give up there?
I find that you have to get into a real Dante moment -- "abandon all hope, ye who enter here" -- to bookend the incredible enthusiasm and bullishness that commanded the stage along with Jack Ma on that fateful day.
At moments like these, I find that people grasp for pretty much anything. I think one of the helpful things to grasp is the chart, or the charts, of the moving averages, something that the man who thought of the confidence gambit I have outlined, Matt Horween, has been urging me to do.
There weren't many good ones, but the low on the S&P 500 (SPY - Get Report) moving average in yesterday's bizarre whoosh came around the long-term moving average on the monthly chart, and that's actually good news. I always like it when the stocks that lead us down, like the oils, have a bit of a bounce, too.
The huge volume has the earmarks of a fulcrum day.
But I think that as long as there is any confidence that we are further through the Ebola crisis than we might be, we remain vulnerable. A vaccine, a sign of protocols working, a level of care that allows more people to survive, those would bring back confidence. More outbreaks, though, especially through casual contact? A confidence breaker, and one that could slice through the floor of any moving average.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.