“On the surface, this market does look both astonishingly bullish and astoundingly placid. You’ve never seen a bull this calm before,” Cramer said. “And look, it makes sense. We’ve got nice earnings growth coupled with an accelerating economy [and] low interest rates both here and abroad, [the] perfect prescription for a healthy bull market.”
But as volatility dwindles, with October on its way to being the least volatile month for equity markets in modern history, the chances of a pullback are growing more likely.
“Historically, periods of minimal volatility lead inexorably to periods of surging volatility, and when that happens, stocks tend to sell off, as many investors can’t handle that turbulence,” Cramer said.
“In other words, calmness breeds complacency, historically, and sooner or later complacency gets punished, sometimes with a slap on the wrist, sometimes with a full-on beat-down.”