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NEW YORK (
) -- "Don't over-think it," Jim Cramer cautioned the viewers of his
TV show Monday.
While considering the daily barrage of negativity, investors should ask who's been right, he said.
Cramer said the markets were once again gloomy this morning, thanks in part to a negative spin on comments made by
chairman Ben Bernanke. But Cramer questioned whether Bernanke's comments were negative.
Cramer said in reality, Bernanke said he would continue to use every tool at his disposal to keep the economy from getting worse. He said it would have been negative news if he had said he was worried about inflation or saying that stocks have gotten ahead of themselves.
As for the huge run up in oil, Cramer said the bears feel that the move is in reaction to the U.S. dollar. In reality, "people are using the stuff," which is why he favors oil stocks with lots of oil still in the ground, he said.
The negative sentiment continues in everything from copper to gold to this quarters' corporate earnings to housing, said Cramer. In each case, the bear case has simply been wrong, which is why copper, gold and this quarter's corporate earnings are hitting highs, he said.
Even in housing, where the bears constantly pitch that prices are in decline, home prices actually are at the same levels they were this time last year, he said.
Cramer said the time honored principles of investing no longer apply to this market, which is why the bears have been dead wrong, and why all of the major averages, along with most commodities, are up on the year.
"There's a pattern that's been puzzling investors for ages," Cramer told viewers, and that pattern is a stock that runs up ahead of its earnings release only to sell off on what was reported as "better-than-expected" results. Cramer said it's hard to discern a genuine earnings beat from a fake one, but he's come up with a formula.
Cramer said he analyzed all of the stocks in the
this quarter, looking for stocks that both ran up ahead of their quarterly results, and then kept on going higher after the results were posted. Cramer said for this exercise, he looked at stock prices five days prior to earnings, immediately after earnings and then again five days after earnings.
There were 163 companies on the list whose stock ran up at least 2% ahead of the quarter, said Cramer, but only 21 whose post-earnings results were as good or better as in the five days prior to results. The 21 companies were spread out amongst six sectors, from technology and healthcare to minerals and energy.
Since the best predictor of future winners are past winners, Cramer said he's put together a portfolio of five stocks that he feels will repeat this strong pattern of heading higher when they next report their earnings.
Cramer unveiled his "momentum" portfolio of five stocks that fit his momentum detection methodology discussed earlier. Those stocks included
, one of five tech stocks singled out of Cramer's analysis.
Cramer said shares of Jabil are up 11% since his last mention on July 13, but the stock still have terrific momentum an trades at just seven times earnings with a 12% growth rate.
Of the three materials stocks that made the cut, Cramer chose
, a stock which he owns for his charitable trust,
Action Alerts PLUS. Cramer said Weyerhaeuser is play on a recovery in housing and the fact that the company is converting itself into a REIT.
In the energy sector, Cramer nominated
best among the three stocks that made the grade. He said shares of Noble are up 17% since his March 8 recommendation, but the company is still expanding production and is in good financial shape.
Among the three industrial defense stocks on the list, Cramer said
( GR) was his choice. He said the company is a play on a new aerospace cycle. Shares of Goodrich trade at just 16 times earnings with a 20% long term growth rate.
Finally, in the health care group, Cramer chose
, another Action Alerts PLUS name. He said Wellpoint is a solid performer, and the company's stocks could go into the $60s and still represent great value.
Cramer told a viewer that
Nordic American Tanker
is not a good stock to own, as there are too many ships for the current economic climate.
He told a second viewer that of the 500 stocks in the
, there are 499 he'd rather own before buying
, a stock that's "lost control of its own destiny."
On the positive side, Cramer told a viewer that he would be a buyer of
, a stock that's been steadily recovering since the Gulf oil spill, and
( OXPS), which recently declared a huge special dividend.
When asked about
, Cramer said he does not have an explanation for why the stock dropped sharply, only to recover later. "Sometimes weird things happen," he concluded.
Finally, Cramer said he's still a buyer of
, an inexpensive stock which he said will be improving next year.
Cramer gave the nod to
as a play on a recovery in the housing market. He said while the headlines on housing may still be negative, a surprise pop in
, along with record pending home sales, is signaling that things are definitely changing.
That change will spell good things for Wells Fargo, a bank with fewer than average mortgage problems, and one that is aggressively lending with solid loan practices in place. Cramer said as buyers begin realizing that interest rates aren't going down anymore, Wells Fargo is in the best position to capitalize on the new business.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Weyerhaeuser, Wellpoint.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, TheStreet.com or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor TheStreet.com, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.
Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.