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If the current rally is to continue, the leaders need need to hold on to their gains, Jim Cramer said on his "Mad Money" TV show Wednesday.
He examined the tech, oil and banking stocks, which fueled Tuesday's huge rally, to see how they fared in today's trading session. He came away with a mixed review.
Tech, Cramer said, followed through on Tuesday's gains, with both the Nasdaq and the SOX semiconductor index put posting gains again today.
Likewise, many tech bellwethers such as
Cramer said the oil patch was a severe disappointment. With the news that oil and gas inventories are still too high, and stocks like
and Cramer fav
, a stock which he owns for his charitable trust,
Action Alerts PLUS, both lower, this sectors is showing no signs of a rally.
The banks, however, were in rally mode, with
both lurching higher. He said there was even an upgrade of
What does the market need to continue this rally? Cramer said he'd like to see even more analyst upgrades, along with good news from the oils.
He also said he'd like to see weakness in the consumers stocks. That, he explained, would signal that investors are leaving the recession-resistant stocks for other sectors.
"It's not too late to buy on pullbacks," he said.
Cramer spoke with Sam Reed, CEO of private label food maker
, to find out if people really are choosing lesser expensive grocery products to save money.
Reed confirmed Cramer's thesis, saying in general, private label products are enjoying accelerated growth. He said the company's mix of soups, salad dressings and salsa is helping to propel Treehouse to the forefront of that growth.
When asked about input costs, Reed said Treehouse's input costs rose three times above last year's forecast, and the company wasn't able to offset those costs with price increases.
However, due to cutting other costs and improving efficiencies, the company is now over that hump. Reed said Treehouse will see the benefits of falling commodity prices in the second half of 2009.
Finally, when asked about acquisitions, Reed said Treehouse is ready to expand again in a large, strategic way. He said the company has a strong balance sheet and paid down more than $145 million in debt.
Cramer said it's clear Reed delivered on all his promises, but it appears the stock is still stalled. "That smells like opportunity to me," he concluded.
A Chipmaker Worth Owning
"At last there's something worth owning in semiconductors," Cramer told viewers.
, he said, is the perfect way to play the Chinese economic recovery and stimulus package.
Cramer said Taiwan Semi shocked everyone yesterday when it raised its guidance instead of cutting its forecast. The company, which makes chips for industry giants like
, said its seeing strong demand from China.
Cramer said the chip business is all about inventory levels. When inventories are high, prices fall, and when they're low, companies can charge more. Taiwan Semi's inventory bottomed in December, and currently demand is outstripping supply.
Furthermore, competitors don't pose a sizable threat to the company because they appear to have thinned inventories too much.
On the heels of a big partnership deal with Intel, Cramer said Taiwan Semi may look expensive at 27 times earnings, but noted that P/E ratios are the wrong metric to use.
He said the company's price-to-book value is the ratio to use, and using that metric, Taiwan Semi still has room to run.
A Recipe for Disaster
In "Outrage of the Day" segment, Cramer took aim at the nation's current banking policies. He said while we might not know what will ultimately save the banks, we certainly know what will destroy them.
Cramer said if you wanted to destroy all the banks and create a total banking Armageddon, there are three things you would do. First, you'd keep the ban on the uptick rule, which would eliminate the fear in the markets and keep short sellers at bay.
Second, you'd keep the strict mark-to-market rules so the banks would be forced to liquidate assets rather than loan more money.
And third, you'd demonize all bankers, treating them all as crooks, driving the wedge of mistrust in even deeper.
These three things, Cramer said, are what you'd need to do to create a total collapse in banking. Ironically, he said, these are precisely the current rules of the day. and that needs to change. "If we don't change," said Cramer, "all of the major national and regional banks are going to fail."
Cramer was bullish on
He was bearish on
World Wrestling Entertainment
UIL Holdings Corp
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At the time of publication, Cramer was long ConocoPhillips.
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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