Oil and Financials Can Both Work Here

How much do I want Doug Kass' surprising pair trade of going long the Energy SPDR (XLE - commentary - Cramer's Take) ETF and going short the Financial SPDR (XLF - commentary - Cramer's Take) ETF to work? I have tried to figure out when the financials will run out of steam -- in the short term, because I believe in them now on weakness -- because they are now up the 50% on average that caused them to cool in 1990. I have tried to figure out if there is any bottom in the oils given the valuations: Do I really have to sell Conoco (COP - commentary - Cramer's Take) at 5 times earnings or Devon (DVN - commentary - Cramer's Take) at 6 times? That's what you are doing if you boot them now.

More important: Which is the major trend, oil or finance? Can you really own the financials here if the Fed is about to tighten? Can you really sell the oils with valuations that reflect May 2007 pricing that is $50 lower?

And the answer? I want to own them both. I don't want to short one and own the other. I want to buy the weakness of oil and I don't want to sell the financials. I own Goldman Sachs (GS - commentary - Cramer's Take), and it was at $150 last week; now it is at $186, but it is high quality and it should never have been there. I own Morgan Stanley (MS - commentary - Cramer's Take), which is still way down. Like others, I want Wells Fargo (WFC - commentary - Cramer's Take) or Wachovia (WB - commentary - Cramer's Take) or even Citi (C - commentary - Cramer's Take) to go down so I can buy 'em.

Selling Devon here with the biggest find in the Gulf beginning to produce in 2010? Count me out. Selling Occidental (OXY - commentary - Cramer's Take) at 6 times earnings, when it is finding oil and nat gas all over the place and is extremely well run? No thanks.

Doug's paired trade?

Gutsy. Too gutsy for me, at least on the oil side, for the short term. Let me hedge, let me wait until tomorrow, when the XTO (XTO - commentary - Cramer's Take) block trades and the hurricane truly misses the nat gas infrastructure, because that's going to be the ugliest moment of all -- maybe as ugly as, well, as 10 days ago for the banks!

At the time of publication, Cramer was long Devon, Goldman Sachs and Morgan Stanley.

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Jim 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. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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