Picture Becomes Clearer in Banks and Energy

Which is more vulnerable here, American International Group (AIG - commentary - Cramer's Take) or Occidental Petroleum (OXY - commentary - Cramer's Take)? Which would you rather sell, ConocoPhillips (COP - commentary - Cramer's Take) or Merrill Lynch (MER - commentary - Cramer's Take)?

I think all of these stocks are going down. But I think that I can put values on OXY and Conoco. I like buying stocks at six times earnings. I like buying companies that are buying back stock and can boost dividends. I don't like companies that have to issue stock or cut dividends including ones that have just been boosted -- recklessly, like AIG did.

It seems to me that we are getting closer to drawing a line in the sand for Big Oil where we want to buy stocks at six times earnings going to five times earnings. At the same time, we want to buy the fortress banks -- Bank of America (BAC - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take), Wells Fargo (WFC - commentary - Cramer's Take) and U.S. Bancorp (USB - commentary - Cramer's Take) -- into the weakness, dabble with Wachovia (WB - commentary - Cramer's Take) when it gets to below what Bob Steel paid, and avoid the unquantifiables like Merrill and AIG, both of which I think need more capital.

And I am looking to sell Citigroup (C - commentary - Cramer's Take), which is not a fortress.

I am looking at this AIG and MER roll over and all the other financials with them. I am looking at oil crumble again -- and I don't want to bet on crude, which I think is going $110-$120, but I do believe that these stocks are going to be the ones you want to buy down every few points, along with Devon (DVN - commentary - Cramer's Take), and the cheapest of all, Cabot Oil & Gas (COG - commentary - Cramer's Take). The latter two are nat gas, which is poison now but can't remain so once whoever is long gets out.

There is a pervasive long out there blowing out every second. The only thing I know is that $8.99 is supposed to be the long-term spot where industrial demand is, and we hit that level and bounced, but I am not a technician, and you don't want me to start being one at this age!

Anyway, I think that we can now be selective in what we sell in finance and selective in what we buy in oil. Do not need to scale-sell AIG, I would scale-sell Merrill, and I would scale-buy the major oil companies, lest you wait until they are in buying and miss it.

Random musings: You know it is bad in Japan when they stop buying cancer insurance -- look at that Aflac (AFL - commentary - Cramer's Take), and that's a great company!

At the time of publication, Cramer was long Cabot Oil & Gas and Devon Energy.

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