Jim Cramer Says Don't Trust Any Rally In September Unless These 2 Things Happen

Despite the pickup in momentum seen in late August, the market has gone back to its cautious ways with the start of September. Typically, September is one of the weakest periods for the market but analysts see a silver lining in the cloud.

They point to the trend of September bucking the historical seasonality if the August that precedes it was weak.

CNBC Mad Money host Jim Cramer, however, sounded out a note of caution.

What Happened: "It's September, do not trust any rally unless the yield on the 10 year drops and oil loses at least $3," he said in a post on X, formerly Twitter.

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Since bottoming in July 2020, the 10-year yield has been on a broader uptrend, with the upward momentum accelerating since March this year. After peaking at a 15-year high of 4.3%+, the yield has come off a bit. The sharp spike in yields, which move in the opposite direction to bond prices, is due to expectations of more rate hikes forthcoming from the Federal Reserve.

LPL Financial's Chief Fixed Income Strategist  Lawrence Gillum said just because yields fell for many years doesn't mean that they have to keep rising.

“In fact, at current levels, after years of artificially suppressed levels, long-term yields are back within longer-term ranges,” the analyst said.

“And with inflation trending in the right direction and the Federal Reserve (Fed) near (at?) the end of its rate hiking campaign, we think the big move in long-term rates has already happened and interest rates are finally back to normal.”

Oil On Boil? Crude oil prices rallied on Tuesday amid Russia and Saudi Arabia's decision to extend production cuts. That said, black gold has come off from the $130+ level at which it was trading in March 2022.

Weak global economic growth has kept a lid on prices and the commodity is currently trading in the mid-$80 levels.

Higher oil prices have the potential to push up inflation, and this in turn can prevent the Fed from dropping its guard in its inflation fight. The market resurgence seen this year is premised on a Fed pivot. Any development that derails the hope could be negative for the market.

The United States Oil Fund, LP USO fell 0.36% to $77.48 in premarket trading Wednesday, according to data from Benzinga Pro.

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