Don't Be Duped by Downgrades

Valuation downgrades everywhere. Just today we have valuation downgrades in Amazon (AMZN - commentary - Cramer's Take) (Barclays (BCS - commentary - Cramer's Take)) Cypress Semi (CY - commentary - Cramer's Take) (UBS (UBS - commentary - Cramer's Take)), Mohawk (MHK - commentary - Cramer's Take) (Credit Suisse (CS - commentary - Cramer's Take)), Black & Decker (BDK - commentary - Cramer's Take) (Credit Suisse), Biovail (BVI - commentary - Cramer's Take) (Goldman Sachs (GS - commentary - Cramer's Take)) and Perrigo (PRGO - commentary - Cramer's Take) (Goldman Sachs).

These are classic misdirection plays. All of these analysts want off these stocks because they believe we are going to go right back to where we were a month ago.

That's a dangerous view. The risk to the upside here is too great for these analysts and they will pay the price for not staying on to higher prices, which is the same as not getting off when we were going down.

There is no doubt that the near-term fundamentals are getting worse or not improving for all of these except Amazon, which is having a great quarter. The bottom-to-top run is very, very big and these analysts might think they are being piggish, but they are not being piggish from the point of view of where they were at the beginning of the downturn.

The bears will have to struggle with the notion that the near term is awful but the year over year or second half could be good.

For instance, I totally understand the idea of downgrading Caterpillar (CAT - commentary - Cramer's Take). The quarter will be terrible. But then I look at Ingersoll-Rand (IR - commentary - Cramer's Take) and I wonder whether the bears will be so lucky as to cover on a negative event, because a lot of people will want to get in on a negative event, including an earnings shortfall. It is what I used to get into Ingersoll-Rand.

I write this because of what happened with Nucor (NUE - commentary - Cramer's Take). This steel company, the best there is, was completely shelled by a terrible preannouncement that quickly brought the stock down from $37 to $31. But then you caught 11 points. Eleven points is a real big deal.

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