Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Bob Lang to show viewers what the phrase "rotation" really means. Using the iShares NASDAQ Biotechnology
(IBB) exchange-traded fund, Lang and Cramer demonstrated how the biotechs are getting crushed as big fund managers now prefer the industrial and cyclical stocks.
Using a daily chart, Lang noted that the biotechs have fallen 12.4% in just a month on heavy volume, signaling that the big boys are indeed liquidating their positions. The Williams oscillator, or WSM, signals a deep oversold condition, as the group broke through its 50-day and 100-day moving averages.
But as Cramer noted, the weekly chart shows a different picture, one of only a minor correction in a much larger uptrend. Lang noted similar pullbacks in June 2013 and November 2012, both of which were terrific buying opportunities.
Cramer said that in the short term the outlook for the biotechs is grim, but he noted that stocks like Celgene and Gilead Sciences
are still fabulous companies, ones that will snap back just as soon as the current wave of selling has subsided.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer explained why the shareholders of big, established tech and biotech companies have been feeling the heat of late. It's because of the red-hot IPO market.
Cramer said the venture capitalists know when the market is craving new deals, and that time is now. That explains why so many initial public offerings are being announced, most notably today -- Box
But all the money that's pouring into these new IPOs needs to come from somewhere, said Cramer, and it's coming from big fund managers cashing in on their slower-growing tech and biotech holdings.
Cramer said that in a perfect world, the established players would be acquiring these newcomers themselves. But with the market willing to pay so much more, their venture capital backers are choosing to roll the dice and hope for that big first-day pop instead.
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-- Written by Scott Rutt in Washington, D.C.
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