NEW YORK (TheStreet) -- 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:
- Stocks breaking out of their usual ranges, and
- The effect of an increased supply of stock.
Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
I'm Getting Sticker Shock
Posted at 12:22 p.m. EST on Friday, June 20, 2014Holy cow, $131. Chevron's (CVX) at $131? That's what I said last night when a guest in our audience asked me whether it was time to let go of some chevron at $131 and cycle into another oil. You know what I experienced when the questioner asked about Chevron? I experienced sticker shock, a revelation that, at last, Chevron had left behind a range that it had been stuck in for a full year of trading. I had known Chevron as a stock that needed to be bought every time it dipped below $120 and then sold every time it got to the high $120s. The trade was money and it had been money until right about now, when it broke through the range to where it had not been before. We have been experiencing sticker shock all over the place of late. For eight months, PPG (PPG) dallied in the $180-190 area. Then, three weeks ago, it broke out of that range and hasn't looked back. The sticker shock in the oils has been breathtaking. Have you seen the action, for example, in Union Pacific (UNP) or EOG (EOG), two of my long-standing favorites? Not only have these gone from creeping higher to galloping higher, another form of sticker shock, but they've split their stocks, making the prices even more unfathomable. (WAG) or Monsanto (MON), both of which report next week. I can't take the sticker shock there and I either have to get a pullback or I just have to shrug and say it's gotten away without me. The best of all worlds, I think, is when you are spotting a stock that has based and seems to be about to break out. That's how I feel about all of the aerospace names. They have spent time in the wilderness. They are ready to blast off. Same with the banks. Those are two groups that might soon experience sticker shock and that's the best place to find your ideas right now in this market. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.
Supply Kills Posted at 12:34 p.m. EST on Thursday, June 29, 2014 Supply kills. When people talk about what can cause a top in the market, they invariably chatter about how the Fed can hurt stocks with higher rates. They grouse about valuation. They even hang on every word of the Fed chief, Janet Yellen, who when asked yesterday whether stocks were too high, gave a less than enthusiastic "no," but nonetheless refused to put the kibosh on the market. But they almost invariably never talk about the real bull slayer: increased supply of stock, particularly from the initial public offerings and gigantic secondaries that contain huge chunks of insider stocks. When we examine what caused the now almost-forgotten decline in the highfliers from March to, May I would say the primary culprit came from a rash of initial public offerings of second-rate quality and a massive amount of insider selling from some of the hottest stocks out there. Those include the once-beloved security software company FireEye (FEYE), which sold 14 million shares at $82 and quickly plummeted to the mid-$20s, as well as the e-commerce and big data plays Rocket Fuel (FUEL) and Splunk (SPLK), both of which plunged more than 50% after their offerings. (JD), the fast-growing Chinese Internet company, and Arista Networks (ANET), the best-in-breed networker. That's because sellers were willing to give a little, bankers sensed that the public had taken too much of a beating, and buyers were no longer overwhelmed. The quality of offerings was much higher than at the top of the market. Now, however, the market has rallied enough that we are seeing a return to a level of supply that is making me uncomfortable. Yesterday we had five IPOs -- way too many for me -- and only two made you money. The other three truly stunk up the joint. Today we caught three IPOs and, fortunately, they were all good ones, particularly, Markit (MRKT), a company that dominates the pricing and reporting of many complex and abstruse financial instruments. That deal is so good, with such exceptional bloodlines, including the backing of General Atlantic, that I would still buy it up here. I backed a GA deal before,TriNet (TNET), which turned out to be one of the real stalwarts in the market. I believe this deal will be a good one, too, in part because General Atlantic has two terrific members on the board and they did not sell stock on the offering. Nonetheless, once again, there is too much supply coming on to the market with a huge slate of deals for next week. We are hearing talk of a revival of the shelved big deals. We haven't seen big secondaries yet, but that could be next. All I can say is that this supply, above all, is worth watching and worrying about. If it keeps up or gets hotter and heavier, we must be on heightened alert and be ready to lighten up before supply wreaks its havoc again. At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.
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