Jim Cramer warns investors against investing on false hope

CNBC’s Jim Cramer told investors on Monday not to let short-term rallies lure them into making optimistic trading decisions.

“A rally based solely on everything going wrong is a rally that cannot and will not survive. She doesn’t have staying power unless something is actually going right,” said the “Mad Money” host.

“Nothing has gone right so far, so stop doing anything else and just get used to” the turbulent market environment, he added. “Because that’s exactly what the market wants you to do.”

Cramer’s comments come after the Dow Jones Industrial Average rose 0.08% on Monday. The S&P fell 0.39% while the Nasdaq Composite declined 1.2%, ending a volatile trading day.

Rising inflation, concerns about US Federal Reserve rate hikes and recession fears are some of the economic factors currently rocking the market. Cramer also pointed to JetBlue’s hostile takeover bid for Spirit Airlines and the downturn in the cryptocurrency market as examples of headwinds.

“Of course, thanks to all these negative factors, the market is actually going down. But then, like at noon, some of the averages start going higher because of all the hope out there, and then that hope gets the hope machine going again,” Cramer said.

However, investors who trade on false hopes will only worsen the market downturn, he warned.

“I can tell you right now, that kind of wrong thinking has shaped the whole downtrend: ‘Something to build on.’ … You can’t build on quicksand,” he said.