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NEW YORK (
) -- "Selling is not a dirty word," a passionate Jim Cramer told, make that yelled, to his
TV show viewers Tuesday.
Cramer repeated once again that investors can always take profits and can always avoid down days in the markets like today.
Cramer said after a spectacular October where the markets have risen almost 1,000 points, stocks have simply gotten overextended and were ripe for a big down day like today. He scoffed at the many reasons why investors choose not to sell, such as paying taxes or not taking a loss. Cramer said being a trader, taking profits on the way up, is the only smart way to invest.
, a Cramer fav and stock which he owns for his charitable trust,
Action Alerts PLUS had risen from $81 to $92 a share almost overnight. Cramer said investors should have been taking some profits at those highs so they could avoid the losses suffered today.
Some investors like to wait to get back to even before selling. But Cramer said with stocks like
, which fell 25% today alone, show how that strategy just doesn't work. "It's still not too late to sell First Solar," he said, adding the same can be said for
Cramer said he's often criticized for recommending investors sell stocks like
, another Action Alerts PLUS name, or
, but these are two more examples of stocks that can, and should, be traded as they rise and fall.
Cramer said waiting to "get back to even" didn't work after the dot-com bust in 2001 and it won't work now. That's why when high fliers like
see rising inventories, that's a red flag that should prompt investors to lighten up now, ahead of the move, instead of waiting.
Borrowing a classic line from the movie "Wall Street," greed is not good, said Cramer, it's actually bad.
Big Negative Gone
In the "Executive Decision" segment, Cramer spoke with Kelcy Warren, chairman and CEO of
Energy Transfer Partners
, a pipeline master limited partnership that recently announced that it will sell its propane operations.
Warren said that while he likes the propane business, consolidation in the industry is needed, which is why he chose to sell its propane assets to
. He said the resulting Energy Transfer will have far less seasonality and will no longer be affected by swings in the weather. "Our natural gas lines are full every day," he explained.
Warren also outlined a coming transaction with its parent
Energy Transfer Equity
, where the parent will be merging with another entity and dropping down ownership of some assets to Energy Transfer Partners. Warren said this transaction will allow his company to create its own growth going forward.
Looking towards the future, Warren said he expects to be moving more and more natural gas as the quarters roll on and Energy Transfer Partners will continue to "follow the drill bits" to wherever natural gas is being discovered. He said the price of the commodity has little effect on his company's earnings, but increasing volumes certainly does.
Finally, when asked about the prospects of exporting U.S. natural gas, Warren said it's positioning itself for that business, but he's not optimistic that the U.S. will ever be a big exporter of its gas.
Cramer said with the big negative of propane now gone and the promise of growth coming in 2012, Energy Transfer Partners is paying investors to wait.
Off the Charts
In this segment, Cramer went head to head with colleague Ed Ponsi over the chart of two sectors, the banks and the retailers. Using the
KBW Bank Index
Merrill Lynch Retail Holders
ETFs as proxies, Ponsi got to work.
According to Ponsi's analysis, the weekly chart of the banks shows that the group has lagged the markets, failing to break above its $40 ceiling. However the group now exhibits a reverse head-and-shoulders pattern, which signals a bottom for the sector. Ponsi also noted the MACD Indictors also point towards a bullish move for the index. Ponsi felt the banks could see a 10% pop in coming weeks.
In retail, Ponsi said that this group is flirting with its 52-week highs, but has exhibited a golden cross pattern where the 50-day moving average crosses the 200-day moving average. Each time this happens, the charts surge higher. The daily charts of the same index, however, signal that in the short term, the group may be overbought. Ponsi felt waiting for a pullback, like today, would be the prudent move.
Turning to the fundamentals, Cramer asked why own an index when you can pick the best companies in the group? He said in retail, that's
, while for the banks that would be
, an Action Alerts PLUS name with no European exposure, and
a strong regional player.
In his second "Executive Decision" segment, Cramer spoke with Warren East, CEO of
, the intellectual property giant whose chip designs are found in 95% of all mobile phones and MP3 players. Shares of ARM are up 270% since Cramer first recommended the company in October 2009.
East challenged analysts' assertions that the company's revenue levels are not sustainable. He said the company's licensing has moved "to a new level" where growth can, and is, happening. East said that ARM is paid by over 100 semiconductor companies, some of whom enjoy better fortunes that others, but with ARM chips in a broad range of applications, the company continues to grow.
Other positives on the horizon are ARM's relationship with
where the company is helping to bring Microsoft's next generation products to ARM chips. East said that ARM is taking things "one step at a time" with Microsoft and ultimately it will be Microsoft who determines the release dates of those new products.
Finally, when asked about competition from
, East noted that ARM designs have always been the leader in always-on, energy efficient products and he only sees his company extending those leads.
Cramer said he's still a fan of ARM and continues to recommend it on any weakness.
Cramer was bullish on
SPDR Gold Shares
He was bearish on
No Floor in Netflix
In his "No Huddle Offense" segment, Cramer said short sellers will keep
on the decline.
Cramer explained that Netflix has always had more than its share of critics and short sellers. And it was those short sellers that were forced to cover their positions that helped to send Netflix shares into the stratosphere. It wasn't actual demand, he said, it was short covering.
Making matters worse, when the company did screw up, there weren't any shorts left to buy shares back and cushion the fall, he said.
"There's no floor in Netflix," Cramer warned viewers to stay away from the stock.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Cummins, Apple, US Bancorp.
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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