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The alternate is on a high-risk freeway, says Jim Cramer

CNBC's Jim Cramer sounded the alarm on Wednesday, saying that the stock market is nearing a foamy environment where investors are paying for stocks while ignoring fundamentals.

"You wouldn't know about the quiet action on average … but that feels a bit like a Kenny Loggins market," he said after the conclusion of Mad Money. I'll say it – a highway to the danger zone. "

The comments come after a mixed trading session with the S&P 500 closing lower for a second straight trading day and the Nasdaq Composite taking a breather for the first of four. Despite the S&P 500 falling 0.03% to 3,909.88, the benchmark remains within six points of Monday's record close. Tech-heavy Nasdaq was down 0.25% to close at 13,972.53 after getting used to hitting new highs over the past week.

The Dow Jones Industrial Average rose 62 points to 31,437.80, a new record, and continued its upward trend after breaking a six-day winning streak on Tuesday. The blue chip index has now had eight positive days over the past 10 years.

Cramer said the market is showing signs that "people are getting too greedy". Repeat is a common phrase that bullish and bearish investors make money while pigs are slaughtered.

"In a foamy market, stocks will have tremendous rallies that are completely unrelated to underlying fundamentals," he said. "You get enough of these movements and you have to take something off the table, because just like when you pour yourself a beer, the foam doesn't stop."

Cramer pointed to special purpose vehicles or SPACs, cannabis stocks and short squeezes, like the headlines developed last month by investors using Reddit as catalysts for high market valuations.

"So you have to be careful when it gets so frothy, but and this is crucial, I'm not saying go out now," he said. "I'm not saying sell everything. I just ask you to be disciplined and sell something because no one has ever been hurt to make a profit."

Cramer isn't the only voice on Wall Street warning of the current environment. In a statement released Tuesday, a Bank of America analyst wrote that a market correction is in sight, with stocks seeing a 10% decline.

Jared Woodard, an investment and ETF strategist at Bank of America, also attributed the potential decline to market exuberance and a split between Wall Street and Main Street. Should the market fall, he believes that it will open up new opportunities for investors.

"We expect a buyable 5% to 10% correction in the first quarter as the big unknowns coincide with excessive positioning, record stock offering, and such a good earnings revision," said Woodard.

According to the CNBC Market Strategist Survey, Bank of America has a year-end target of 3,800, well ahead of the average analyst target of 4,082.

"You have to make hay when the sun is out, I want you to. Remember, stocks are ultimately pieces of paper and Wall Street will keep printing those pieces of paper until the buyers run out of firepower. Buyers will be subdued" said Cramer.

"We're not there yet, but if there's a snack from the Foam-O-Meter, we're definitely on our way in that direction."

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