Back to Defensives

So they have already gone back to the defensives, the double-dip stocks. It is incredible how quickly "they" come to the conclusion that the safest course is safety and the presumption that Clorox (CLX - commentary - Trade Now) and Colgate (CL - commentary - Trade Now) will outperform.

It is also amazing to me how 30 cents' worth of natural gas is worth 20% to those stocks, or how quickly the industrials give up the ghost back to 4%, or how the retailers look like they are beginning their long march back down. Suddenly JC Penney (JCP - commentary - Trade Now), Nordstrom (JWN - commentary - Trade Now) and Target (TGT - commentary - Trade Now) look toxic, and we are right back to square one with Lowe's (LOW - commentary - Trade Now) and Home Depot (HD - commentary - Trade Now), as if nothing good has happened in housing.

Meanwhile, Caterpillar's (CAT - commentary - Trade Now) yield goes to 5% as does Federal Realty (FRT - commentary - Trade Now), two of my indicators for commercial construction. The only surprises? How little Freeport (FCX - commentary - Trade Now) down and how strong the banks are?

As for the defensives, it is worth remembering that most did not have good quarters. The best were Colgate, Clorox and the just-reported General Mills (GIS - commentary - Trade Now). I thought Pepsi (PEP - commentary - Trade Now) had a darned good number, but when it was reported it was in the midst of the bottler bailout, which seems to be forgotten -- rather strange. I like the ones with the high yields -- I'm anxious to buy some Altria (MO - commentary - Trade Now) and Bristol Myers (BMY - commentary - Trade Now), which had good quarters, for that very reason.

Terrible session, of course. But it's nice to see something rise from the rubble.

Random musings: A safe and happy Fourth for all!

At the time of publication, Cramer was long Bristol Myers, Home Depot, Pepsi, General Mills and Altria.

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