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Cramer and Link: Taking a Breather on Financials

NEW YORK (TheStreet) -- Last week, Jim Cramer and Stephanie Link, co-managers of the Action Alerts PLUS portfolio, decided to exit their position in Morgan Stanley (MS - Get Report) and adopt a more cautious outlook on the financial sector as a whole. 

In a recent video interview, Link stated, "I just don't like the way the yield curve is acting in the near-term, even if it is temporary." Add in Morgan Stanley's high beta, and it all but made sense to sell the name in order to reduce sector exposure. 

However, short-term weakness and consolidation can work in investors' favor if they believe in the longer-term picture. And that breather is exactly what they're looking for after the sector put up big returns in 2013. 

According to Link and Cramer, they plan on using their gains in Morgan Stanley to add to specific companies on a pullback. These buy-on-weakness stocks include: Bank of America (BAC - Get Report), J.P. Morgan (JPM - Get Report), KeyCorp (KEY - Get Report), U.S. Bancorp (USB - Get Report) and Hartford Financial (HIG - Get Report).

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DISCLOSURE: At the time of publication, Cramer's Action Alerts PLUS portfolio had a long position in BAC, JPM, KEY, USB and HIG.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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BAC $14.80 -1.50%
JPM $63.60 -0.80%
HIG $43.76 -2.73%
KEY $12.42 -1.19%
MS $27.23 -1.09%


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