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NEW YORK (
) -- The market continues to move higher despite the fact it is loathed by individual investors, Jim Cramer told viewers of his
TV show Tuesday.
Cramer came up with seven reasons to explain this phenomenon.
No. 1. CEOs continue to deliver good news. Cramer said American CEOs are terrific and keep delivering great quarters with upside surprises and great guidance for the future.
No. 2. Negative news surrounding housing is off base. Cramer said the Case-Shiller Index today revealed what he's known all along: Home prices are rising, and despite media reports, the bottom in housing was a year ago.
No. 3. There is a sentiment that things will improve after the elections. Cramer said the markets are anticipating certainty after November, and that's making hedge funds cover their short positions early.
No. 4. European banks didn't go broke. After all of the forecasts of doom and gloom earlier this year, the European banks are raising capital and are indeed, still standing.
Nol 5. Compared to the U.S., the rest of the world is strong. Cramer said listen to just about any conference call and the common theme is that the recovery is well underway around the globe.
No. 6. The
knows what needs to happen to keep the economy strong. Cramer said you can't fight the Fed, and chairman Ben Bernanke knows what he's doing.
7. Money managers realize where money can be made. Cramer said money managers see that high-paying dividend stocks are a better bet than bonds, and the money is beginning to move in that direction. "Sell your bonds," he said.
Cramer said the bad news isn't as bad as we think, the good news is better than the think, our CEOs and Federal Reserve are doing the right things and the rest of the world is perking up. "If you rub enough stones together, you'll eventually get some sparks," he concluded.
In the "Executive Decision" segment, Cramer spoke with Jim Whitehurst, president and CEO of
, the world's leading provider of the Linux operating system to businesses and enterprise.
Whitehurst said that Red Hat's biggest obstacle is overcoming inertia, where businesses get familiar with a product and tend to stick with it rather than looking for better options. He said in reality, Linux is faster, cheaper and more reliable than any other operating system.
Whitehurst said typically businesses discover Red Hat when they're upgrading their server hardware, and require an operating system for mission critical applications that never goes down. He said that over half of the world's equity trading is now done on Red Hat for that reason.
For individuals looking to use Red Hat, Whitehurst said they can turn to
for the company's free version of their software.
When asked about analysts concerned over the company's cash flow, Whitehurst said that cash flow is not a good metric for the company, as more cash is tied up the more the company grows. He said that operating cash flow understates Red Hat's performance, and the company is growing at 25% a year, although it still only represents less than 20% of all server operating systems.
Cramer said he's been too enamored with
, and has been ignoring how good Red Hat actually is.
Stock on Fire
In the "Off The Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the chart of
a stock that's been on the move this year. However, he wondere whether investors missed the move.
According to Fitzpatrick, the weekly chart of Cirrus shows the stock broke out of its bullish trend in May, and accelerated even higher. While late-stage buying is often a negative, Fitzpatrick noted the volume was strong during this period, meaning institutional buyers were at work.
The daily chart showed that Cirrus' 50-day moving average, which had been support for the stock, turned into resistance in August as the stock took a breather. This would have been bad news for Cirrus had the stock not finally broken past that resistance today. Fitzpatrick said Cirrus is poised for another move higher.
Cramer agreed, saying the sky's the limit for Cirrus, a company which gets 34% of its revenue from
, a stock which he owns for his charitable trust,
Action Alerts PLUS.
Cramer said Cirrus is moving into more smartphones next year, and the company's energy management chips are also on fire. Trading at just 11.6 times earnings, Cramer said the stock of Cirrus could double and still not be expensive given its 20% growth rate.
Cramer made a change to his "Wall of Shame" list of the worst CEOs by removing Robert Fornaro, CEO of
( AAI). Cramer said it's never too late for redemption, and by selling AirTran to
for a 61% premium, Fornaro doesn't deserve to be on the wall any longer.
Cramer also told a viewer that improving credit losses are what will help regional banks like
New York Bank
( NYB) head higher and that he likes Chinese search giant
because its financials look like an American company, which makes comparing it to
Finally, when asked where a possible takeover of chipmaker
Advanced Micro Devices
makes AMD a buy, Cramer said absolutely not. He said that AMD has the bad fundamentals, and he'd steer clear.
Cramer was bullish on
He was bearish on
Clean Energy Fuels
Cramer said that upbeat guidance from
makes him think semiconductors like
may be worth looking into.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Apple.
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