Education Stocks Will Teach Only Pain

Covering the online and ad hoc education stocks must be a nightmare. If I were an analyst in charge of writing about Career Education (CECO - commentary - Cramer's Take), I know what I would do. I would forget about the models and the earnings and see if I could get myself on a grand jury. Odds are it might be one going after this industry. I would spend some time in the Justice Department and with the Securities and Exchange Commission, maybe even get an internship in New York Attorney General Eliot Spitzer's office -- anything but cover these companies traditionally.

This morning is no different. Just when we thought the shorts might be in a tizzy because the Apollo (APOL - commentary - Cramer's Take)-University of Phoenix Online (UOPX - commentary - Cramer's Take) (will someone please tell me why those are two different stocks?) phalanx announced better-than-expected earnings, that nasty grand jury inquiry into Career Ed came out. Of course, there is always the slim chance that the Justice Department just happened to pick Career Education's name out of the phone book; we all know how mercurial Justice Department investigations can be.

I wouldn't bet on that chance, though.

Look, these stocks are momentum stocks. It doesn't matter what breaks momentum: It can be earnings shortfalls, accounting chicanery or grand juries. Once the momentum gets lost, the buyers turn to sellers and the chart gets lost, too.

Which is why, once again, I suggest that if you own these stocks you really have to play black this weekend in roulette at the Borgata with me. I bet it will come up 50% of the time. You'd love those odds vs. the stocks you are in now.

Random musings: The travesty of Krispy Kreme (KKD - commentary - Cramer's Take) continues. Don't you wish they shot stocks after they got wounded, instead of letting them play out with that dreadful braying and obvious pain?

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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Click here to buy Cramer's latest book, "You Got Screwed!" Click here to order Cramer's autobiography, "Confessions of a Street Addict."