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Cramer's 'Mad Money' Recap: Sellers Nowhere in Sight

Scott Rutt

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

"We've finally run out of sellers in this market," Jim Cramer told viewers of his "Mad Money" TV show Friday.

He called the day's market action the most bullish he's seen since the market bottomed on Nov. 21, and told investors what they should be doing next.

"Today should have been a short seller's paradise," said Cramer. With news of the biggest hedge fund scandal ever coming to light and the failure of a congressional auto bailout package, Cramer said the markets were set for a horrible open, yet powered higher throughout the day.

"What we saw today was a lot more than just the auto bailout," said Cramer. This is a market where everyone who wants to sell has finally sold, he said. And after a day like today, where the market rallied even amongst the bad news, hedge funds will have to change their bias.

Cramer said investors need to stick with the strategies he's been featuring. That means ainly investing in only companies with high yields, those trading at or near their cash values and those with recession resistant businesses.

"The bears are starting to hum a new tune," Cramer concluded.

Red Flags

On the heels of the Bernard Madoff hedge fund scandal, Cramer told investors that they can no longer count on the Securities and Exchange Commission to protect them.

The SEC, he said, was investigating Madoff, yet found nothing. "No one cares about your money more than you," he reminded viewers before outlining the warning signs they should look for in order to protect themselves.

Cramer said that if investors cannot figure out how a money manager is making their returns, it's time to get out. In the case of Madoff, Cramer said even his seasoned staffed were unclear where Madoff's profits were coming from after looking at the funds statements and filings.

Cramer also reminded viewers that if returns are too good to be true, they are. He said that Madoff's "profits" were way too consistent to be real. "Nobody is that consistent for that many quarters in a row."

Cramer told viewers to also look into how a fund is structured. Accountants, he said, should always report to the investors, he said, and not management. Firms should also have separate brokerages, not inside brokerages as Madoff had. It's way too easy to hide losses that way, he said.

Finally, Cramer said Madoff's fee structure should have also been a red flag. Hedge funds typically have a 2% management fee and take 20% of the profits, he said, but in the case of Madoff, fees were based on trading. Never trust a fund who gets paid to trade, he said.

Cramer's bottom line: Investors need to do their homework and research who's managing their money.

Speculation Friday

For this segment, Cramer said there just might be a lot of money to be made in the most beaten down of technology stocks. He offered up three companies which he said are ready for a serious rebound.

Cramer said semiconductor maker Ciena (CIEN Quote) is at the top of his speculation list.

The company recently reported disappointing earnings and fell a staggering 20% in a single day.

Cramer said the point to note is that after such a huge loss, not a single analyst downgraded the name. "The estimates have already been cut," he said, with all of the bad news already priced into the stock.

Second was telco equipment maker Tellabs (TLAB Quote).

Cramer said Tellabs is currently trading just about its cash value and has no debt on its balance sheet. The company supplies telcos and cable companies with equipment to increase bandwidth and Cramer said "we need more bandwidth."

He said there is almost no downside in the stock, but the potential for sizable upside.

Third was mobile chipmaker and former Cramer favorite Skyworks Solutions .

He said Skyworks is a play on the increasing popularity of smartphones, and with earnings estimates slashed to just 16 cents a share for 2009, all of the bad news is already baked into these shares as well.

Mad Mail

In this segment, Cramer told a viewer that wildcat driller Rex Energy (REXX Quote) no longer works in this market. "When that group is hot, they're hot, but now they're cold as ice," he said.

Lightning Round

Cramer was bullish on Advanced Micro Devices , Express Scripts , Wachovia (WB Quote), Thermo Electron (TMO Quote) and BP (BP Quote).

He was bearish on Nvidia (NVDA Quote), MGM Mirage (MGM Quote), Las Vegas Sands (LVS Quote), PetMed Express (PETS Quote), Imperial Oil (IMO Quote) and Electronic Arts .

Check out the latest edition of "Cramer's Take on Top-Searched Stocks" on Stockpickr.

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

Read more of Cramer's Mad Money Lightning Round insights.

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