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Jim Cramer told viewers of his "Mad Money" TV show Wednesday that an exodus has begun out of the commodity sectors that have been overcrowded with big institutional investors.
Cramer said it's typical on Wall Street for big money to move in tandem. So naturally as the world's central banks began printing money and offering up stimulus, hedge funds and mutual funds began flocking into hard assets such as mining, minerals, steel, oil and fertilizers.
The reverse is true when these sectors get too hot, or too crowded, said Cramer. And that's exactly what's happening now. With the European central banks hinting that stimulus might stop, oil struggling to top $72 a barrel, and today
signaling weakness in fertilizer prices, the exodus out of commodity stocks has begun, said Cramer.
Where is the institutional money headed next? Cramer said it's back to the safety of the defensive names such as the food and beverage stocks and the drug stocks.
He said stocks like Potash, along with
will see continued pressure, while stocks like
, a stock which Cramer owns for his charitable trust,
Action Alerts PLUS, and
will continue to rally.
Cramer said clarity is driving the seemingly endless rally in the healthcare stocks.
Wall Street has been punishing the healthcare group since before Obama took office, he said, largely on the fears of what sweeping reforms in healthcare might mean for the companies. But now that we know what the plans are, and the curtains been lifted, investors can begin investing again.
as one healthcare stock that's benefiting from the clarity of what Obama's plans include. He said the stock is trading at just eight times next year's earnings, but noted that those multiple won't last for long.
Cramer said he likes the Wellpoint's sale of its pharmacy management business to
and said the company is poised to crush earnings estimates going forward. He said the company could trade as high as 10 to 11 times earings, taking shares to the $60's.
But if Obama's plans turn out to be even better than expected, or if they don't happen at all, as was the case in the Clinton era, Cramer said Wellpoint and other HMOs could return to historic multiples of 13 to 14 times earnings.
If that happens, he said, Wellpoint could soar to $100 a share.
Outrage of the Day
Cramer sounded off against the
United States Natural Gas
ETF, a new fund designed to track the price of natural gas.
According to Cramer, this new fund, which buys natural gas futures, is now large enough that its buying actually moves the price of the commodity itself.
Cramer once again pleaded to the Securities and Exchange Commission to ban these ETFs and return to their roots of leveling the playing field for average investors.
He said funds like the U.S. Natural Gas Fund only exemplifies how the SEC is making terrible mistakes and is allowing day traders and short sellers to run amok and manipulate prices.
"This is the tail wagging the dog," said Cramer, "and it needs to stop."
Cramer told a viewer that when it comes to
, he just cannot recommend Wendy's. It's too expensive, he said, and just has no momentum.
Cramer told a second viewer that the rally in smartphones will not extend to
, a billing and software provider to many of the major carriers. He told the viewer that
is the best way to invest in this trend.
Am I Diversified?
Cramer played "Am I Diversified" with callers to see if their portfolios have what it takes. The first caller's portfolio included
Bank Of America
Cramer advised selling CitiGroup and adding a healthcare company.
The second caller's top holdings included
Cramer said this portfolio rocked.
The third caller had
Energy Transfer Partners
as their top five stocks.
Cramer said this portfolio was also diversified.
Cramer was bullish on
Nordic American Tanker
He was bearish on
World Wrestling Entertainment
Check out the latest edition of
"Cramer's Take onTop-Searched Stocks" on Stockpickr.
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At the time of publication, Cramer was long Pepsi, Home Depot, Visa.
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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