With money flowing out of the financial stocks, the financial technology segment of the market attracts the interest of amateur buyers placing bets on their stocks, CNBC’s Jim Cramer said Tuesday.
“Whenever bank stocks fall, we immediately get an enormous amount of option purchases PayPal and square,” the “Bad money“Host said.” The market makers, who have to short out the calls to them and then the stock to protect themselves, are hurt. You are overwhelmed with endless purchases like you’ve never seen before. “
The comments come after the stocks of JP Morgan and Citigroup – both of which had announced quarterly results before the market opened – fell around 2% and 5%, respectively, despite posting top and bottom line beats in their quarterly reports.
That’s because Wall Street has little interest in owning bank stocks, Cramer said. The sector has reached its limits given the precarious state of the global economy and has lagged the market throughout the year.
Square and PayPal stocks rose roughly 3% each during the session, while key averages sparked a four-day winning streak.
“Buyers will not cancel and die [short sellers] Torn to pieces again and again because of these novel young buyers who just don’t understand how it’s done and think they’re geniuses, “Cramer said.” I don’t know how these buyers are getting out of their positions, but their willingness to pay for PayPal and Square is shocking. Pros hate getting stocks up with their own purchases. “
Disclosure: Cramer’s charitable foundation owns shares in JPMorgan.