CNBC’s Jim Cramer said his charitable trust felt compelled to make purchases during Monday’s session after it began so negatively, especially in large-cap technology stocks.
While the Nasdaq Composite was able to shake off losses of more than 2% to close slightly higher Monday, Cramer said the investment trust saw opportunities to take advantage of the early weakness and acted for multiple reasons.
“When an important index like the Nasdaq trades at a three-month low, you have to at least buy something that’s being thrown out because they can’t all be that terrible,” the “Mad Money” host said.
Cramer’s charitable trust added to its positions in three stocks: Health-care firm Danaher and semiconductor companies Advanced Micro Devices and Marvell Technology.
“We know that many people like to buy a rising market because they have fear of missing out. They’re trying to sell high and buy higher, but sometimes they simply buy high and get crushed,” Cramer said. “The thing is, if you buy now, you’re buying low — or at least, much lower than where we were a few weeks ago. That’s how you can avoid kicking yourself for buying stocks near the peak.”
Another reason Cramer said he had confidence to buy in Monday’s session was Take-Two Interactive’s announcement that it planned to acquire Zynga, a mobile gaming company behind the FarmVille series.
“Some very smart businesses are actually taking action here, which tells me that the lower prices are creating real bargains for other companies,” said Cramer, who added that he was also encouraged that bond yields moved off their session highs throughout the afternoon.
To be sure, Cramer said he still sees aspects of the market that “disturb” him, namely the strength in bank stocks ahead of their quarterly reports in the coming days. Continued selling in financial technology stocks is also worrisome, he said.
“Now, the pattern in this part of the market is to rally off the lows and then open higher the next day, perhaps massively higher [if bond yields keep falling] before coming in a bit between 10:30 a.m. and 11 a.m.,” Cramer said. “That’s what makes things so hard. If it opens up tomorrow, it’s very difficult to figure out what to do. It’s another reason why I keep stressing that you need to do your buying into the weakness of ugly days like today.”
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