Secondaries Give a Vote of Confidence

When your company de-levers, the market jumps up and down with happiness. Earlier this week, I was mortified when I had recommended Vulcan Materials (VMC - commentary - Trade Now) as an infrastructure play, and it cut its dividend. But at the same time it announced an equity offering, and I knew we would be off to the races, because all of these big industrial secondaries have worked out.

But I never thought they would work out this well. VMC priced the deal at $41, and it ran to $47.25 immediately. It was incredible to behold this kind of move, the kind of move that if I were bearish on the market would give me pause.

I need you to know how unusual it has been to see this kind of action in my life. This is a secondary for heaven's sake, a secondary. A big steaming secondary for an aggregate company. And the stock takes of like a red-hot IPO! That's astonishing.

But then you have to ask yourself, how could it not work, when you consider that buyers on the US Steel (X - commentary - Trade Now) secondary made 16 quick points as that company delivered?

Of course, there have been so many financial secondaries out there that we do get some fatigue in that business, as could be seen by the Ameriprise deal, priced at $25, that you are instantly down 68 cents on. But you did pretty good on all of the little-guy secondaries this week, and there's no reason to run from the group -- just be pickier.

These are the "underneath" signs you have to be looking for, the incredibly bullish elements are the likes of the X secondary or the VMC deal. These are undeniable shows of strength that lend credence to what I have been saying for several months now, the money's flowing in, not flowing out. When the most important thing you can do is befriend the syndicate manager to get in on a secondary that is tight as a drum, beware if you are a bear, because you might just get stampeded out of the joint.

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

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Know What You Own: In Friday's trading, the most active stocks include Bank of America (BAC - commentary - Trade Now), the S&P Depositary Receipts (SPY - commentary - Trade Now), Citigroup (C - commentary - Trade Now), the Financial Bear 3X (FAZ - commentary - Trade Now), the PowerShares QQQ (QQQQ - commentary - Trade Now), New M&I (MI - commentary - Trade Now) and the Financial Bull 3X (FAS - commentary - Trade Now).

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