Jim Cramer's Best Blogs
NEW YORK (
) --
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:
- a recent trading pattern that screams bullishness in the market;
- how Whirlpool astonished the market; and
- the looming danger for the Facebook IPO.
for information on
RealMoney
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
Looking at a New Pattern
Posted at 6:36 p.m. EST on Friday, Feb. 3.
Darned thing wouldn't quit. Ample opportunity to, with Israeli saber-rattling, still no Greek deal and a market that's on the verge of going parabolic.
But, you can feel there's just not that much supply out there. Stocks are going up in part because buyers are moving them with smaller orders than used to be possible. Brokerages aren't "positioning," meaning shorting a stock to a client to get started building a position. Instead, they're just taking stock, and it seems like there's just not a lot of stock out there.
Let's use the example of
Starwood Hotels & Resorts World
(HOT)
, a stock we bought yesterday for Action Alerts PLUS. We sent out a bulletin out when it was down about three that the selling was overdone and it was a buy.
> > Bull or Bear? Vote in Our Poll
The stock was so heavy you could have thought it was an anvil. Sellers were pounding it and pounding it.
Turns out that was the only moment you could have bought it. Today, nothing was for sale. Tight as a drum. The stock opened above where there were several million shares for sale yesterday, without any new information. Next thing you know, it blitzed up a couple as if it had delivered an upside surprise.
This is a new pattern. We didn't see this in 2011. The sellers didn't reload. They either finished or walked away. Those who did bang it down now have to be thinking, "What was I thinking? I didn't need to do that."
Watch for this pattern. I saw it recently in
Johnson Controls
(JCI) - Get Report
. Saw it in
Amazon.com
(AMZN) - Get Report
. Seeing it now in
Norfolk Southern
(NSC) - Get Report
, which was supposed to be so disappointing.
To say this is a "bullish" pattern is being way too understated. When sellers dry up and disappear in an environment where brokers won't short you stock, you have to use false price breaks like we got yesterday in HOT -- "false" because it didn't guide down at all -- to get long.
Otherwise?
You're the sucker who paid two today after missing the down-three entry point yesterday.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long HOT and JCI
.
Whirlpool Comes Clean
Posted at 3:48 p.m. EST on Friday, Feb. 3.
It looks like all of the shorts are coming home to roost. All those extrapolated goodies that made so much sense to put on -- at least in 2011, they did. And the latest busted trade? The latest
Green Mountain
(GMCR)
? The latest
Netflix
(NFLX) - Get Report
?
It's
Whirlpool
(WHR) - Get Report
. When I was doing my series on what companies could benefit from a consumer's decision to stick around and fix up a home, I took a long hard look at Whirlpool. In the end, I nixed it.
You know why? Because that last quarterly conference call before this week's report was a pure nightmare. There could not have been more things wrong -- from higher raw costs, to cutthroat competition, to a bloated work force, to an intractable shadow inventory of homes, to the smallest new-home build in several generations. Even Brazil, which had been a saving grace, was terrible.
The company said it would get tough, make the big changes, fire lots of people and get things back on track.
Who would have trusted these guys? I don't know anyone who did. I know people who have lost money bottom-fishing with this company for three decades. Why should this time be different? You figure WHR reports a terrible quarter, then cuts guidance citing foreign competition, higher steel costs, and yes, a still-weak housing market.
Nope. WHR delivered and gave terrific guidance. The bears told me that guidance is all smoke and mirrors. Frankly, if this company -- which was so abject and prostrate last time around -- says things can improve, I will take their word for it.
This remains a perilous short, though, because the U.S. government is considering sanctions on Asian companies that dump washers and dryers here. If there are sanctions, Whirlpool could go through the roof.
My advice? If you haven't covered, it's not too late to do so.
Action Alerts PLUS
, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
Worry About a Facebook Hijacking
Posted at 6:15 a.m. EST on Thursday, Feb. 2.
Facebook has an astounding level of profitability. This company, like
(GOOG) - Get Report
, has to hire to meet insane demand. But unlike Google it looks like everything can and will be monetized as the management seems more disciplined and focused on shareholder returns.
I could go over the metrics -- how fast it is growing, how much money it's making -- but instead I just want to dwell on what happens when you have a deal where lots of people like the company's product and they want in. I am talking about a deal that occurred more than a dozen years ago.
I am talking about
TheStreet.com
now known as
TheStreet
(TST) - Get Report
.
TSCM, the symbol at the time, was oversubscribed the moment it was filed, just as I am sure Facebook will be. The buyers tended to be people who liked the product because we had caught the great wave of individual investors, a wave that peaked a long time ago.
The deals at the time were all red-hot, courtesy of decisions made by the underwriters to limit the float to small amounts hoping that later on there would be secondaries at higher prices. But they only knew how to gauge the institutional investing public, not the individual investors who flooded in from over the transom. That's how a $20 deal could open in the mid-60s, a rush of market orders took it there. (If you want to read more, pick up
Confessions of a Street Addict
, as I have all of the gory details recounted.)
And that's what I am afraid can happen to Facebook. They are talking about offering $5 billion in stock for what might be a $100 billion company. Forget for a moment that at $100 billion it might be overvalued and focus on the moment at hand. If users of Facebook overwhelm the system with smaller orders that wrench the stock from the syndicate managers, this one could open way too high, stay up there for a little and then fall back as even the biggest institutions decide they want to take profits.
As far as the filing, I see no flies on it. The growth seems sustainable, although not accelerating, which is reasonable given the base that it's coming from. The advertisers seem eager to buy space, although I do need to see if it can make as much money mobile as it can on the laptop or desktop, something that's ailing Google.
It's the allocations and the possibility of a sliver of stock offered while over-the-transom buyers gang tackle the darned thing at, say, a $120 billion market cap. That's what we have to watch for. In that sense, what matters isn't how it is doing. The merchandise is terrific. It's the price that the deal gets hijacked at. Right now it is more than likely that because of the inherent excitement among retail investing users, you are going to go from a real good valuation on the offering, which you definitely want to be in if you can, to an obscene valuation by the time it opens and, reluctantly, you may just have to part with your stock, rather than buying more in the aftermarket.
Action Alerts PLUS
, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.
