Monday’s market rally may be short-lived

CNBC’s Jim Cramer warned investors that Monday’s stock market recovery, fueled by optimism about the possibility of an end to the U.S.-Iran war, could be short-lived.

The market staged a dramatic comeback on Monday after President Trump said the United States would stop attacks on Iran’s power plants and energy infrastructure. But the “Mad Money” host said the rally “It smelled of fear,” and it won’t last long unless the Iranian regime’s behavior backs up Trump’s claims.

S&P 500 And Nasdaq Composite Oil rose 1.15 percent and 1.38 percent, respectively, on Monday, as hopes rose that the Middle East conflict and recession concerns would rise, causing oil prices to soar. BrentThe international indicator fell 10.9 percent after a week-long rise due to supply disruption concerns in the energy-rich region.

“At the end of the day … it was like the whole rally reeked of fear, fear of those who were underinvested and better off buying stocks because they didn’t want the market to move without them,” Cramer said. “The fear that the brief talks they had during the March of their precious year could be wiped out by a real peace agreement.”

Cramer’s comments come as the Iran war enters its fourth week and conflict has escalated in recent days following the president’s ultimatum. On Saturday, he threatened to launch attacks on more Iranian energy facilities if the Strait of Hormuz is not reopened within 48 hours.

Cramer added that it would be difficult to sustain Monday’s rally unless Iran’s actions support Trump’s comments. So far there are some conflicting signs about what will happen next.

Trump said Monday that the United States and Iran want to “make a deal” and that the two countries are having “productive talks” to resolve the dispute. However, Iranian state media reportedly denied the president’s claims hours later.

Cramer used the election as a metaphor for Monday’s volatile trading session. He described traders in different asset classes as “voters” betting on the outcome of the war. Cramer stated that “the bulls carry the popular vote” and said, “If Iran does nothing, no missiles or unmanned aerial vehicles, I expect a recount tomorrow.”