Oil and the Banks Continue Their Tango

Can oils and banks coexist? Can these two groups go up together, one because the companies aren't going out of business and are loaning again and the other because despite the decline in oil none of the budgets -- or the current earnings -- were predicating on anything near where oil was?

To me, the banks can play catch-up for a while simply because people are afraid to short them. They have upward momentum because they are going to reflect some nominal franchise value.

The oils can stabilize because, like Schlumberger (SLB - commentary - Cramer's Take), the numbers are huge while the multiples are low. Citigroup's (C - commentary - Cramer's Take) not going up on earnings, it is going up on solvency. You get a virtuous circle up instead of a vicious cycle down as the psychology changes and people want to buy stock now to "catch" a solvency bottom. (And kudos to Doug Kass, who allowed you to catch an actual bottom in Lehman (LEH - commentary - Cramer's Take).)

SLB shows the dire need for some earning momentum in a market where it is clear that ag and minerals are losing it and tech has lost it, something that most knew but few cared about until Microsoft (MSFT - commentary - Cramer's Take) turned out to be, once again, nothing like the Microsoft of old -- this one is a bond -- and Google's (GOOG - commentary - Cramer's Take) a spending monster.

So in the musical chairs game, it might be out of tech into oil for a bit, unless oil plunges immediately to $110, my short-term target now that we found a level it can't get through -- $150 -- and ends up repelling it all the way back to near $100.

I got blindsided this week in natural gas -- fell back with and through the market -- for Action Alerts PLUS because of my conviction that natural gas is the short-term fuel of the future. But it too got too speculative with guys knocking on my door asking me to take down oil and gas partnerships for the Marcellus Shale (the top, $13 at that moment when the knock came). Now we are back to levels where we could get some long-term lock-ins by consumers that would make the numbers in the out years spectacular.

Notice that the banks, if I am right, will have a pullback once they do their equity offerings. But then we will have decisions to make, and some banks -- notably JPMorgan (JPM - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take) -- might be given the keys to the whole regional store.

Either way, I am short-term bullish on oil and extremely-short-term bearish on banks until they get their deals done. When they do, the timing will be much better to go long after this monster run.

At the time of publication, Cramer had no positions in the stocks mentioned.

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