Oh my lord…
Before I say anything further, I have to echo a previous statement in this thread, that is, retail investors don’t drive stock quotations, and the institutional investors that do, don’t make their portfolio selections based on TV finance gurus.
I’ll admit I’m not a day trading expert and have only traded on demo accounts but I do know a little bit about investment. IMO the strategy you’re suggesting seems delusional even from a day-trading perspective. Most day traders use some combination of technical analysis and short-term security/market analysis based on recent news and events. Your strategy is just based on theoretical logic that you haven’t even back-tested. You haven’t looked at historical data to see how much money you could make if you had implemented the strategy in the past. This would be quite simple to do if you have access to Cramer’s past recommendations. Maybe look at one year back, it would be easy in terms of finding Cramer’s recommendations. The thing is, even if you do this kind of analysis and you find you could have generated a profit, there is no guarantee the same strategy will deliver similar profits, if any at all, in the future. Such is the reality of the market man, especially in the day-trading environment. My guess? You implement your “Cramer Bounce” trading strategy and you’ll be lucky to just break-even.
Understand the foundation on which your strategy is based – you’re assuming Cramer’s recommendations induce some kind of price reaction to the specific stocks he has mentioned. Man, I don’t know about you but such an assumption has no intellectual soundless at all. It’s preposterous. The only way Cramer has any market influence is if he’s established himself as some kind of informational intermediary by relaying analyst consensus forecasts. However, in this scenario you actually want to listen to what he’s saying and even then good luck making any profit because you’d just get competitively priced out.
I could take this discussion all over the place but for the sake of coherence I’ll just say one more thing about your Cramer strategy: try it at your own peril. Its foundation has less theoretical backing than most other trading strategies that claim to be able to make you money. Only a few trading strategies actually make you money when you try them the first time (and we’re not even talking about magnitude here) but NONE of them are sustainable.
And only day-trade if you don’t have a full-time job, there’s a reason it’s called day-trading. Just value-invest; you could have returned over 1,000% (or more) if you invested $10,000 into the S&P in 2002 and made continuous monthly investments for the 10 years ending 2012.