Oil, War, and Wild Swings: Why Today’s Market Mirrors a Forgotten Era

Jim Cramer: It's World War III vs. What Me Worry?

The Market

I see so many who want to compare this market to some market in recent history, more often than not I hear 2022 because of the Ukraine War and higher oil prices and inflation.

I suppose we can see some similarities. In 2022 we had seen SPAC-mania one year prior. This time around you have heard me say several times that I thought the action we saw in the fall with the rocket stocks and quantum stocks and AI mania was similar to that early 2021 period.

And there was the oil spike associated with war. Back then it was Ukraine; now it is the Middle East. And there is the fear of inflation. So I get it.

I am not the type who looks for analogies in markets (somehow all those analogies seem to end up in a 1929 crash!). But I do find myself reminded of the Iraq invasion of Kuwait in the summer of 1990. I’m not sure the pattern is similar, but the intraday swings feel similar.

Back then the price of oil swung with every movement in the Middle East (that is the case today) and stocks reacted. One hour we might be rallying only to see a headline cross the tape that had something negative and down we'd go. But the opposite was also true: the market would be down, and a missile would leave Iraq for Kuwait and then one of our Patriot Missiles would intercept it and the market would rally. It was like this for much of August, September and October.

Sure, it lasted into November and December, but the violence of it had subsided by then. By then we were much more focused on the economic indicators. And the circumstances were quite different as well. We did not get involved in the war until January 1991.

But my point is that we really have seen this sort of thing before. It’s just that so many who are trading today likely weren’t around then. You’d have to be old like me to remember it!

Aside from that there wasn’t much to say about today’s market because it was more of the same: up and down. Nothing broke support, nothing broke resistance. Growth outperformed the 493.

The two things I will be focused on in tomorrow’s trading is, can growth continue outperforming? Also, Nasdaq has been green for two consecutive days, and it hasn’t had three since late January. Six weeks is a long time, so to go along with the recent outperformance, I want to see if it can change the pattern and close green on the day.

New Ideas

I have had a lot of questions on where I think the pullback in IGV will go and what the target is. As a reminder just over a week ago I had that line at 83 and I said over that I think it goes to 88-89. I don’t have a strong sense on a pullback. I suppose 83 is doable but with Oracle up after hours I would pay closer attention to if it can get back up over 88. All of a sudden there are an awful lot of folks who think software is buyable and that makes me nervous. If it falls to 83, I’d bet we stop hearing how much folks love software again.

Today’s Indicator

The McClellan Summation Index is still heading down and needs a net differential of +3000 advancers minus decliners on the NYSE to halt the decline.

Q&A/Reader’s Feedback

Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice. Email Helene here.

I would say it is a little shocking that the uranium and nuclear stocks haven’t budged since the war in the Middle East began. Nano Nuclear Energy (NNE) is a little oversold down here but unless it can lift itself up over 25 and hold it all I see is an oversold bounce at best. Maybe it can generate a head and shoulders bottom but that begins with a move over 25 that holds.

When NuScale Power (SMR) dips to 17.50, I thought it would make the right shoulder of a head and shoulders bottom and then it would be on its way to the upside. I was dead wrong. It bounced to 20 and then just went down. A lot.

Now it is at support from last April’s low and since it has basically halved since early January, I would say it is oversold and deserves a rally. Some patience is needed.

Energy Fuels (UUUU) is okay as long as it doesn’t break that uptrend line but there is quite a bit of resistance to chew through.