A Cyclical Rally's Fine Here, a Craze Is Not

We want the cyclicals to rally, we just don't want them going nuts on us. The move up in copper yesterday and the gigantic leap in zinc remind us that we are getting growth with some inflation.

Growth without inflation is nirvana, growth with inflation will translate to 6% short-term rates because the Fed doesn't want hoarding of any minerals.

Back during the May 5-11 time frame, when all the cyclicals rolled over, they did so because the Fed got aggressive. It is almost as if the minerals are tempting the Fed again to do the same thing, and given how much money is now bet the other way -- toward an easing -- you can't have commodities on the warpath upward.

What should you do? Perhaps the best thing to do is to do nothing. Let these stocks percolate a little higher, they are still so low from where they were. Just remember, though, unlike tech or financials or staples, you have zero-sum here. Every dollar that goes back into BHP Billiton (BHP - commentary - Cramer's Take) is going to come out of one of the sectors that is benign and not harmful to the Fed's thinking.

Or, in other words, if you see Alcoa (AA - commentary - Cramer's Take) ramping here, or BHP, or Anglo American (AAUK - commentary - Cramer's Take), or Newmont Mining (NEM - commentary - Cramer's Take), or Yamana (AUY - commentary - Cramer's Take), you know we are coming to the end of this great run we've had.

I would like to think that can't happen. But to say that no matter what happens we are going higher is too stupid and inconsistent with what happened in April and May.

Not a problem yet, but it will be a problem soon.

At the time of publication, Cramer had no postions in stocks mentioned.

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