Buying The Dip? Jim Cramer And Tom Lee Warn Market Hasn't Hit Rock Bottom Yet: 'Quintessential Wrong Thing To Do'

CNBC’s Jim Cramer warned that the market hasn’t found its bottom, advising against buying the dip. Tom Lee of Fundstrat echoed this caution, urging investors to hold off on purchasing stocks, anticipating a forthcoming wave of selling that could signal a bottom in the weeks ahead.

What Happened: Cramer, during his show “Mad Money,” suggested that the market is still in a downward trend, reported CNBC. He cautioned investors to refrain from buying at the start of the session, stating that this is not the right move.

Meanwhile, Lee cautioned that the recent surge in the VIX, the market’s volatility gauge, could prompt further selling, adding to the short-term pressure on stocks, reported Business Insider.

“While we normally like to buy dips, as we said earlier this week, the surge in the VIX says we gotta take buying the dip extra slowly,” Lee said in a video sent to clients on Thursday.

Despite this, Lee suggested that a buying opportunity might emerge soon, as the market seems poised to bottom out, with positive catalysts such as robust corporate earnings growth and potential Fed rate cuts still in play.

“I think there’s a widespread belief that you can still buy the dip. That’s been the right move ever since long-term interest rates peaked back in October,” he said. “Now, though, buying the dip is the quintessential wrong thing to do.”

Cramer pointed out that there are not enough companies with “brown shoots,” or disappointing earnings. He also highlighted the unpredictable patterns of market leaders such as Apple Inc AAPL, Tesla Inc TSLA, and NVIDIA Corp. NVDA, suggesting that investors should not assume that they have reached the bottom.

According to Cramer, the market requires a “vicious open,” followed by a “crescendo” moment, to reach a lasting bottom. He noted that the S&P 500 has seen green intraday before closing lower each day this week.

Lee predicted that the market could hit a trough within the next month, provided that the Middle East conflict does not escalate further, volatility eases, and investors slow their pace of selling. He also forecasted that the S&P 500 could reach 5,200 by the end of the year, with a best-case scenario of 5,500 or higher.

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Why It Matters: Cramer’s warning comes after he outlined potential factors that could lead to further market decline in a previous show. He advised investors to be cautious about their buying and selling decisions, stating, “If you want to get out, go ahead.”

Despite recent concerns, Wall Street veterans are confident that the bull market will persist, citing a robust U.S. economy and the potential of artificial intelligence (AI) as key drivers. The U.S. stock market experienced a recent downturn due to escalating tensions in the Middle East and apprehensions about monetary policy.

Earlier in April, Lee had encouraged investors to seize the market dip following an inflation-induced sell-off, suggesting that a potential June rate cut was still on the table. However, his recent cautionary advice suggests a shift in the market dynamics.

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