Jim Cramer Cautions Against Jumping In As Oversold Market Sparks Futures Rebound Without Clear Catalyst: 'Is It All A Big Trap?'
As major indices have moved into the oversold territory, led by the tariff-fueled selloff over the last three sessions, CNBC’s Jim Cramer has questioned the Tuesday up move in futures.
What Happened: “What a tough moment,” said Cramer in an X post, who is the host of CNBC's ‘Mad Money’.
According to him, the market looks technically ready for a bounce due to being oversold, and futures point to a strong open. However, the lack of clear positive news making the futures surge might make investors cautious about buying into this initial strength.
In the following X post, he also questioned whether buyers were discounting China’s retaliatory tariffs that could worsen the state of the economy. Cramer wonders if the current buying is rational or it “is all a big trap?” He’s cautious about buying into the current positive momentum after successfully avoiding panic selling the day before.
Why It Matters: The technical analysis of the exchange-traded funds tracking the S&P 500 and the Nasdaq 100 indices, SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), shows that both of them have slipped into the oversold zone.
According to Benzinga Pro, SPY was trading below its short and long-term simple daily moving averages, and its momentum indicator signaled a bearish trend with a negative 14.73 MACD line.
Its relative strength index at 23.11 was below the threshold of 30, indicating that it was in the oversold territory and could be poised for a bounce back.
Similarly, QQQ was also below its short and long-term moving averages, having a negative MACD line of 16.90, suggesting a bearish trend. Its RSI at 28.59 was also in the oversold zone.
Cramer, in an earlier post, also expressed skepticism about Monday's post-market futures rebound, calling it "strange" following nine consecutive down days in futures trading.
Price Action: As of Monday, the S&P 500 was 17.65% below its previous record high of 6,147.43 points. The Nasdaq 100 continued to hover in the bear market territory, 21.56% lower from its previous high of 22,222.61 points. The Dow Jones, on the other hand, was down by 15.77% from its 52-week high of 45,073.63 points.
In premarket on Tuesday, the SPY was up 1.28% to $510.85, while the QQQ advanced 1.06% to $428.17, according to Benzinga Pro data.
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