The Salutary Effect of Destocking

If the Baltic Freight Index seems to go down every day, then why is FedEx (FDX - commentary - Cramer's Take) still going higher? If Ryder's (R - commentary - Cramer's Take) getting hammered, why isn't United Parcel Service (UPS - commentary - Cramer's Take)? Why are the rails still higher when YRC Worldwide (YRCW - commentary - Cramer's Take) can't get out of its own way? Do you know that CSX (CSX - commentary - Cramer's Take) and Union Pacific (UNP - commentary - Cramer's Take) just had nice moves and they aren't giving them up?

Maybe all of these moves are just plain false. You simply can't get stocks to stay up if things are as bleak as the Baltic indicates. It is too predictive.

I think what is happening is the inventory destocking conclusion whereby many companies cut so hard so fast that they overcut. Companies are simply shipping to make up for what was sold. Now, here's the difficulty I have on destocking's role in forming a bottom. The logical thing to say is that this whole move is phony because companies are simply rebuilding their inventories. But that's what happens every single time at the bottom.

That's how we bottom. Always. That plus the kind of short-covering we have been seeing -- including stocks such as Bed Bath & Beyond (BBBY - commentary - Cramer's Take) -- explain the part of the market that's rallying today.

So I am not buying that a destocking doesn't count. Today we learned that wholesale inventories dropped big while sales rose. That's real. That's why I am saying that's why the shippers are rallying. And they will continue to rally because of it. Either until we are fully stocked and/or until things get better!

Random musings: Rockwell Automation (ROK - commentary - Cramer's Take) as a takeover target? If that's the case, anything good can happen.... Juniper Networks (JNPR - commentary - Cramer's Take) cuts its forecast and rallies 10%? Again, how bullish can you get? That one, frankly, is too bullish for me.... Nordstrom (JWN - commentary - Cramer's Take) and JCPenney (JCP - commentary - Cramer's Take) are rocking. Same with Polo Ralhph Lauren (RL - commentary - Cramer's Take). Are they just really oversold? I guess, hard to believe as they have run a lot from the bottom.

At the time of publication, Cramer was long Union Pacific.

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