Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the importance of oil;
- stocks as a hated asset class; and
- our over-reaction to every little data point.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Oil Prices Override All Other Factors
Posted at 11:03 a.m. EDT, Monday, Aug. 23
Oil has to stay up if the market is to go higher. The moment it turned down, the market gave up the ghost, as we all figured it would anyway without earnings and without takeovers. We are totally binary and we need the oils and we need signs that we will not go into re-recession, and every tick down in oil means that people presume we are going to have a double-dip. It doesn't matter what else goes higher -- Baltic freight, container rates, rail-car loadings. It is all about oil.
What's incredible is that oil is basically going nowhere anyway during this whole period. It has traded in a tight range for a year now, and any oscillation in the commodity has been distinctly microscopic. The idea that each tick can be so powerful is just one more reason that people dislike this market. We have this commodity we judge everything by, and because it is stable, that means that we don't have to think about it interrupting any positive life signs for retail. Because it is stable, we don't have to think about its impact on the industrial world. Because it is stable, we should not be worried about Chinese demand, especially when you include Baltic freight and container rates.
Yet a 25-cent tick up or down determines whether we have an up day or not for
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or Intel (INTC)
or Time Warner (TWX)
or TJX (TJX)
It's pretty nuts, and whatever is "nuts" drives away players, and that has become the curse of this market.
The only other stats that have this levels of sway are housing, and that's because the estimates are so ridiculously high vs. the reality. We sated, for the moment, the housing demand with the tax credit. It is the summer. Not a lot of players. Why is anyone predicting any existing-home sales at all? Why are these housing companies building any new homes to sell? Isn't it all pretty ridiculous? I think so.
Of course, banks look for any reason to sell, even anticipation of bad housing numbers, and we are certainly going to get those. Banks are levered to bad housing numbers and bad employment claims, two sure-fire reasons to go down.
Without takeovers, the group remains dead. I thought that the NewAlliance (NAL)
-First Niagara Financial (FNFG)
tie-up would mean something to the smaller guys. Nada. I am hoping that Banco Santander (STD)
could take a run at M&T (MTB)
and that could ignite something
in the group, but that's probably wishful.
Oil and housing. Hostage.
I guess the bright side is that oil goes up now and then, particularly in the low $70s, even as everyone says we are swimming in oil.
The dark side: that oil and housing matter so much when there is so much else at stake when you are buying a stock. Or at least there used to be.
At the time of publication, Cramer was long INTC.