Jim Cramer warns investors not to invest based on false hope

CNBC’s Jim Cramer told investors on Monday that they shouldn’t let short-term rallies trick them into making optimistic trading decisions.

“A rally based solely on the fact that everything’s going wrong is a rally that cannot and will not stand. It has no staying power, unless something actually goes right,” the “Mad Money” host said.

“So far, nothing’s gone right, so stop pretending otherwise and just get used to” the turbulent market environment, he added. “Because that’s exactly what the market has in mind for you.”

Cramer’s comments come after the Dow Jones Industrial Average inched up 0.08% on Monday. The S&P dropped 0.39% while the Nasdaq Composite decreased 1.2%, closing a volatile day of trading.

Soaring inflation, concerns about the Federal Reserve‘s interest rate hikes and fears of a recession are some of the economic factors currently roiling the market. Cramer also pointed to JetBlue’s hostile takeover bid of Spirit Airlines and the cryptocurrency market’s downturn as examples of headwinds.

“Of course, the market actually goes down thanks to all those negatives. But then, like midday, because of all the hope out there, some of the averages start going higher and then that hope gets the hope machine going again,” Cramer said.

However, investors who trade on false hope will only make the market downturn worse, he cautioned.

“I can tell you right now, this kind of wrong-headed thinking has characterized the whole move down: ‘Something to build on.’ … You can’t build on quicksand,” he said.