CNBC’s Jim Kramer said Thursday that trying to understand the stock market mindset “can be a difficult task,” especially given the recent volatility on Wall Street over the new omicron variant of Covid. Sentiment is fickle, he added.
The Dow Jones Industrial Average rose 617 points, or 1.8%, despite two more omicron cases recorded in the US on Thursday when the market was opened. Five more cases were reported after the market closed. Dow futures turned negative after the close. The first case in the US, recorded the day before, changed the Dow Jones index from a rise of 520 points to a loss of 460 points.
“Investors now seem to be embracing the omicron option as a new fact of life. Of course, if this strain turns out to be worse than delta, and we start seeing a huge wave of hospitalizations, then we will look back at today’s optimistic sentiment, as a temporary state of insanity, “Kramer said in Mad Money.
But for now, Kramer said there was “too much negativity” in the market ahead of Thursday’s session, “which made it easier for the stock to rally.” Aside from Wednesday’s decline, the Dow fell more than 1.8% on Tuesday after a short break on Monday. Blue chips fell 2.5% on Friday’s shortened trading session after the discovery of an omicron in South Africa.
“We are still heavily oversold,” even after Thursday’s rally, Kramer said, pointing to the S&P’s own oscillator, which he is watching closely, and an upward Vix, or what is called a fear indicator. “Too much fear means you have to look for purchases,” he said. Anyway. Vix, short for the CBOE Volatility Index., indeed fell 10% during Thursday’s bullish session.
“After an amazing day like today, some people will rush to sell stocks because they feel lucky,” Kramer said. “What you need to consider is that there are many others who were waiting for the shelling to stop so they could go overboard and buy. This is where we are now. “
Kramer said the key is to “hold on tight” because there could be high prices ahead of what he calls “falling and expiring stocks that have suddenly been given new life.”