CNBC’s Jim Cramer has suggested that the current market activity may indicate a peak rather than a bubble. He pointed to specific stocks and the Nasdaq Composite’s recent decline as evidence.
What Happened: Cramer, during his show Mad Money on Tuesday, analyzed the market’s recent downturn, dismissing it as a bubble but indicating a possible peak, reported CNBC.
“Toppy” action, Cramer explained, is when stock prices exceed their fundamental value, while a bubble is when stocks soar to new highs and then plummet.
"We start off weak, and then unlike much of the time since the market began to rally in November, we actually then finish even lower. It had been the opposite pattern — some stocks manage to buck the trend, of course, but most can't. That's toppy," Cramer said. "
Bubbly action, on the other hand, is when you go straight up and then straight down, with the only respite being wild short squeezes on the way down."
Nasdaq Composite fell by 1.65%, the Dow Jones Industrial Average by 1.04%, and the S&P 500 by 1.02% on Tuesday.
Several factors, including international issues faced by Apple Inc (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA), suggest a “toppy” market. Tesla ...