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Stocks aren't cheap yet, Jim Cramer cautioned his Mad Money viewers Wednesday after the markets plunged over 566 points, only to stage a powerful midday rally that cut those losses in half. The markets may be hideous, Cramer continued, but they're not hideous enough.
At its lowest point today, the U.S. markets were down 12% for the year. That number is truly awful but it also happens to be right in line with how the markets around the globe are faring.
Cramer said that at a time when every other country is doing its best to stimulate their economies, our Federal Reserve is slamming the brakes on ours. In fact, the Fed's current stance is eerily similar to the one it took in 1937, the one that caused a recession inside the Great Depression that was only stymied by World War II.
Cramer also noted that last year many companies were reporting two sets of earnings: their actual earnings and those on a constant currency basis to show what they would have earned without such a strong U.S. dollar. That trend seems to have disappeared this year, however. Companies are simply laying out their disappointing numbers with no silver lining.
The markets are likely to continue in this no man's land until money managers around the world can make sense of these new realities, Cramer concluded.
Cramer Checks His List
When will the markets finally make an investable bottom instead of just short-term bounces? Cramer revisited his "Finding a Bottom" checklist to see if any of the needed ingredients for a bottom have materialized. His findings? Not good.
In fact, Cramer said many of the items have simply gotten worse. A change in the Fed's narrative was one such item, but just this past Friday the New York Fed governor gave an "all systems go" speech for more rate hikes.
Then there's the U.S. political environment, which has only created more uncertainty in the markets. Likewise with China getting worse, commodities heading lower and oil continuing its historic decline.
Cramer said the only item on his checklist that is a good sign for the markets is investor sentiment getting worse. Once everyone gives up, Cramer reminded viewers, only then can a real bottom be made.
Unfortunately, sentiment alone is not enough to sustain a rally, Cramer concluded, which is why there are more down days ahead.