Give Drug Stocks a Chance

Nobody thinks "buy defense" any more when oil spikes. They just think buy oil and ag. And they sell retail.

I find that pretty amazing. Higher oil prices mean a slowdown in the economy, which means buy drugs and foods, or at least drugs.

But the group is bizarrely despised. Lilly (LLY - commentary - Cramer's Take) getting killed again by yesterday's lackluster quarter.

Merck's (MRK - commentary - Cramer's Take) quarter was actually good and nobody cares. Wyeth's (WYE - commentary - Cramer's Take) was real good and it's getting sold off.

Meanwhile, the Pepsi (PEP - commentary - Cramer's Take)/Procter & Gamble (PG - commentary - Cramer's Take) complex trades like the airlines! I think that's a big mistake.

They aren't that levered to the oil/grain complex. Certainly not as levered as General Mills (GIS - commentary - Cramer's Take), and that's the strongest in the group. Or Kimberly (KMB - commentary - Cramer's Take), which I didn't like that much at all and is hugely levered but didn't go down.

Meanwhile, the ultimate defense plays -- Altria (MO - commentary - Cramer's Take) and Philip Morris International (PM - commentary - Cramer's Take) -- can't buy a point gain.

In fact, the only real defenser that is higher is Medco (MHS - commentary - Cramer's Take), and that's because UnitedHealth (UNH - commentary - Cramer's Take) blew it again. Oops, hate to write this, but UNH really is a bunch of clowns.

I am not counting AT&T (T - commentary - Cramer's Take) because that's not considered defensive anymore; it's a cyclical and trades like one, which means it has strength!

I read this terrific article last night in SFI, the Santa Fe Institute magazine, that talked about this market's inherent emotional irrationality.

Today's Exhibit A about how right that article is.

Too nutty, even for this guy.

At the time of publication, Cramer was long Altria, Philip Morris International and UnitedHealth.

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