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NEW YORK (
) -- "Things aren't perfect, but they're not as dangerous as they were either," Jim Cramer told the viewers of his "Mad Money" TV show as he tried to explain today's roller-coaster market action.
He said investors can't be as nervous as they were last week, now that the $1 trillion European bailout package has arrived.
Cramer explained that the hostage situation is now over. No longer must we worry about the European banks failing, and taking the recovering U.S. financial system with it, he said. The riots in Greece sparked a massive response by the EU, said Cramer, and that takes the doomsday scenario off the table.
More importantly, Cramer said the International Monetary Fund is now involved, and the IMF, he said, takes charge and gets thing done. "They're infamous for being tough," he said.
With Europe now off the table, Cramer said he's left with only a slowing China and rising gold prices to worry about. He said that China is not that much of a worry, because with a 300-million person middle class, there's only so slow China can go before risking uprisings itself. And strong gold prices, he said, are a good thing, as they hold off deflation.
So with all the negatives off the table, what's left? Cramer said it's a much stronger U.S. He said the data is showing house price appreciation in most parts of the country. The job situation is also getting stronger. And data released today shows wholesale inventories rising less than demand for new goods.
But even with all of that good news, Cramer said he still remains cautious in the market. He advised only buying on the dips, using any strong rallies to trim positions and sell the laggards.
Dividend Rich Stocks
Investors should be taking a more defensive posture for their portfolios, Cramer told viewers. That means investing with quality companies with accidentally high dividend yields, companies like
Cramer said this diversified chemicals giant currently yields 4.3%, despite delivering an upside surprise of 18 cents a share when it last reported earnings. Revenue at DuPont rose 24% year over year, causing the company to raise its 2010 guidance.
Cramer said DuPont saw strong growth in every one of its divisions, from agriculture to automotive coatings. In its seed business, DuPont saw 15% compounded earnings growth. The company's electronics business saw sales up 73% from year ago levels. Even the beleaguered automotive coatings business was able to post strong gains.
High-Yielding Stock Ideas
Top 10 Dow Dividend Stocks
Cramer said DuPont also took strong action during the slowdown to cut costs and strengthen its relationships with customers. That, coupled with the company's history of paying 423 consecutive dividends, makes DuPont a winner, he added.
Cramer advised buying shares of DuPont in stages, buying more if shares slide and its yield rises. He also advised reinvesting DuPont's dividends, which over time, yield hefty returns. Shares of DuPont by themselves are down 16% over the past 10 years, he said, but if you factor in reinvested dividends, it's up 21% over the same period.
Off the Charts
Cramer went head to head with colleague Tim Collins over the chart of
SPDR S&P 500 ETF
. Cramer said the markets are being controlled by the big money buying and selling of the S&P futures, so understanding the futures lets investors understand the markets.
Looking at the daily chart of the ETF, Collins said that three things stuck out, and all were negative. First, he said the big volume has all been on the down days, indicating the big money is doing more selling than buying. Second, the relative strength index, a gauge of being overbought vs oversold, has also been very weak. Finally, he cited the ETFs 14-day moving average crossing over its 34-day moving average, which is also a sign of short term weakness.
Turning to the weekly chart however, Collins and Cramer both agreed that short-term weakness could translate into longer-term gains if investors buy on weakness, and wait for the likely jump higher coming in about the next two weeks. Collins likes the $111 level for the ETF, and Cramer said a $125 price tag could follow shortly thereafter.
Outrage of the Day
Cramer sounded off at the Securities and Exchange Commission for its handling of last week's trading debacle, and more importantly, for losing its way.
Cramer said the SECs most influential leader was Arthur Levitt, whose mantra was giving the little guy a break, and leveling the playing field for the average investor. Cramer said the SEC must put the retail investor over the institutional investor, to get it right for those with retirement savings and college tuitions tied up in the stock market.
Cramer said it's time to question what does high frequency trading really accomplishes. What do triple-leveraged ETFs really accomplish? Nothing for anyone but the largest of hedge funds and money managers, he said, while in the meantime, they only hurt, and scare off, those who need the market's most.
Cramer said it's outrageous that the SEC can't even tell us what happened in last week's trading. But worse yet, he said, is that the SEC will likely do nothing, or little, about it. It's time to change the focus, he said. The SEC must do its job, and make the markets safe for you, the average investor, he emphasized.
Cramer was bullish on
RF Micro Devices
Chipotle Mexican Grill
Canadian Natural Resources
He was bearish on
AK Steel Holding
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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."
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