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Cramer's 'Mad Money' Recap: Tech, Take a Walk

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

Until further notice, tech stocks are off limits unless they pass the Jim Cramer test, Cramer told viewers of his "Mad Money" TV show Wednesday.

The best way to trade tech stocks is by following the calendar, he said. And right now, the calendar says it's time to sell tech. Everybody on the Street knows about the calendar, and most money managers defer to its wisdom, he continued.

The secret to tech stocks is that they are seasonal. You sell them in January, you buy them in August, and hold on to them until mid-December, he said.

If market players get lucky with a certain tech stock, they could hold it even until mid-January. But no longer, Cramer warned.

Though he believes that people should consider getting into other sectors during this time, Cramer said investors shouldn't necessarily sell all of their tech picks because of the calendar.

"Discriminate and find out what part of the tech sector is getting damaged," he said.

Cramer advised selling cell phones, handheld plays, storage stocks, semiconductors and software. There is something worse than just the calendar going on for these stocks, he said. It's called competition -- the worst thing that can happen to a company.

People "cannot touch" Advanced Micro Devices (AMD) or Intel (INTC) -- even ahead of Microsoft's Vista launch because of the price war that is surrounding these two stocks, Cramer said.

While once upon a time Intel would have been the clear winner in the price war, AMD is finally big enough to take Intel down with it, he said.

Cramer also suggested that people sell Texas Instruments (TXN), Qualcomm (QCOM) and National Semiconductor (NSM) as well.

However, Cramer said he would stick with Marvell Technology (MRVL), which he owns for his charitable trust, Action Alerts PLUS, because it is levered to Apple's (AAPL) iPhone product, which Cramer likes.

Cramer also distinguished MRV Communications (MRVC) from the rest of the pack because seasonality has nothing to do with whether the company will spin off one of its divisions and make money for its shareholders, he said.

He called software a "total disaster" and said that Symantec (SYMC) had "one of the ugliest preannouncements that was never supposed to happen." Cramer told viewers to stay away from the group.

He also advised viewers to avoid tech stocks that have businesses that revolve around storage. He suggested that market-players sell Rackable Systems (RACK), Brocade Communications (BRCD) and EMC (EMC).

Moreover, Cramer said the handheld trade is "dead," and he told investors to sell Research In Motion (RIMM).

As it's January, people need to play by the calendar -- and play to win. That means cleaning house and "thinking of dumping tech stocks that have nothing to help them float above the seasonality," he said.

But You Can Keep...

At the same time, there are some tech stocks that have what it takes to resist the tug of seasonality and defy the calendar, Cramer went on to say. These stocks, he said, are driven by "blowaway" earnings or "really strong" products.

The five tech stocks Cramer believes that investors can still stick with are Cisco (CSCO), Apple (AAPL), Hewlett-Packard (HPQ), which he owns for his charitable trust; Google (GOOG) and Microsoft.

These are the stocks that should make market-players money as the rest of the tech stocks decline, he said. These are also the stocks Cramer likes more on weakness. If they go down, think of it as an opportunity and buy more, Cramer said.

Although he said he can't blame anyone for wanting to take a profit with Cisco, Cramer believes the company has a "product-driven story that cannot be denied." Not only are Cisco's old competitors "dead," but also, after three downgrades, a lot of the risk has been taken out of the stock, he said.

In addition, Apple just reported a "beautiful" quarter and gave "ridiculously low" guidance for the next quarter. Cramer believes that the flow of new products and the iPhone will drive the stock higher.

Microsoft is too powerful to let seasonality bring it down, and people should view its pullback as a "big, fat gift," he said, calling Vista the "single-most-awaited product story in years."

And though Cramer considers Hewlett-Packard a great play that can't be stopped, he called Google an earnings story, which should have a "Jim Dandy upside surprise." He said Google is the single best Internet play and likes Level 3 Communications (LVLT) as a speculative Internet play.

Am I Diversified?

In his "Am I Diversified?" segment, Cramer's first caller owned the following five stocks: National City (NCC), Procter & Gamble (PG), Johnson & Johnson (JNJ), which Cramer owns for his charitable trust, BP (BP) and Sanofi-Aventis (SNY).

Cramer called out a pair in Johnson & Johnson and Sanofi-Aventis, and advised the caller to sell the latter.

His next caller named the following stocks as his top five holdings: NYSE Group (NYX), BEA Systems (BEAS), Marvell Technology, Sirius Satellite (SIRI) and ThermoFisher Scientific (TMO).

Cramer also spotted a speculative tech pair in this portfolio with Marvell and BEA Systems, and suggested that the caller take profits in BEA.

His last caller named the following five stocks: Sirius Satellite, Rite Aid (RAD), Nymex (NMX), Blockbuster (BBI) and KBR (KBR).

Cramer said he views Sirius, Rite Aid and Blockbuster as speculative stocks and told the caller to make some changes in his portfolio. He advised getting a drug stock and maybe a bank stock.

In his "Sudden Death" round, Cramer was bullish on Transocean (RIG), which he owns for his charitable trust, Action Alerts PLUS, GlobalSantaFe (GSF), Wells Fargo (WFC), JPMorgan (JPM) and J.C. Penney (JCP).

He was bearish on Hercules Offshore (HERO), The Bank of New York (BK) and Aeropostale (ARO).

Lightning Round

Cramer was bullish on NYSE Group (NYX), Altria (MO), Public Storage (PSA) and Tower Group (TWGP).

Cramer was bearish on General Motors (GM), Hertz Global (HTZ), LoJack (LOJN), Del Monte Foods (DLM), ON Semiconductor (ONNN), DivX (DIVX), King Pharmaceuticals (KG) and Tata Motors (TTM).

For more of Cramer's insights during the Lightning Round, click here.

Want more Cramer? Check out Jim's rules and commandments for investing from his popular book by clicking here.