Investment guru Jim Cramer said it’s time to buy stocks despite the bearish signal from U.S. Treasurys as coronavirus fears persist.
The “Mad Money” host said the MarketEdge Short Range Oscillator is informing his call to buy.
“I expect a mild recession based on weakness in travel and entertainment, but right now the oscillator is saying you should buy stocks, both short and long term,” Cramer said on CNBC.
Cramer said he has relied on the proprietary indicator, which measures buying and selling pressure in the market, for his entire career. He said it lets investors know “when the selling may have gotten ahead of itself.”
When it goes above a reading of five, it means it’s time to sell, Cramer said. When it goes below negative five, it’s time to buy. Recently, it went below negative 12 and “that’s almost always a great time to buy,” Cramer said.
“Each time was a marvelous moment to buy stocks. Each time, stocks were overreacting to some news that turned out to be not as serious as Wall Street believed,” Cramer said. “Sure, things were bad, but they weren’t that bad ... and these things were all solved.”
However, not many investors seem to agree with Cramer right now.
Wall Street plunged early Thursday as the fast-spreading coronavirus led California to declare an emergency, while airline stocks were hammered by crippled travel demand.
The S&P 500 had ended 4% higher on Wednesday, as Joe Biden's surprising lead in the Democratic primaries distracted traders from the widening spread of the pathogen in the United States.
The benchmark index has recouped nearly half of its losses from its worst week since the 2008 financial crisis, but is still about 7.5% below its record close on Feb. 19.
Fears about economic growth resurfaced on Thursday as the U.S. death toll rose to 11 and California reported the first fatality outside Washington state, a day after lawmakers approved an $8.3 billion bill to combat the outbreak, Reuters explained.
Wall Street's fear gauge jumped 14% to 36.60.
"Volatility is the norm right now as we ascertain how much economic damage is going to be done in the wake of the coronavirus epidemic," said Art Hogan, chief market strategist at National Securities in New York.
Recent data have signaled underlying strength in the domestic economy. Official figures on Thursday showed weekly jobless claims fell last week, following a strong reading of the services sector.
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