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As reporters play "pin the tail on the sell-off," trying to explain today's market decline with eye catching headlines, Jim Cramer told the viewers of his "Mad Money" TV show that he's got the real answer.
Cramer said the sell-off was not due to a breakdown in the technology stocks, as some reported. He said the tech stocks are still selling at some of the lowest historical P/E ratios ever.
The failed takeover of
( JAVA) is nothing to be concerned over, he said. "Why did
want to buy them in the first place?"
Cramer said the sell-off was not due to a collapse in oil prices either. A pullback in oil is not a bad thing, he said. Isn't $50 a barrel oil better for the economy that $60 a barrel oil?
The sell-off was also not due to the rally in gold, said Cramer. After a $100 fall in the price of gold, doesn't a rally make sense? He also scoffed at the idea that Treasury Secretary Tim Geithner's plans aren't working. "Can we have a little wait-and-see," he asked?
Cramer said the real answer as to why the market declined is simple: profit taking. After a huge 20% rally off the bottom, people are simply taking some money off the table, he said. This week is also a vacation week, he added, with many schools on spring break.
Cramer told viewers not to be discouraged by the decline, or the light volume. The markets could still go lower, he said, but the fundamentals are still there.
The Dark Horse
Sometimes the best stock is one no one believes in, Cramer told viewers. Stocks that are out of favor, often have room to run, and that's why Cramer's turned bullish on
Cramer said Sprint is by no means the best wireless or wireline telco, but it is the best performing stock in the S&P 500, up a staggering 137% so far this year. At only $4.35 a share, Cramer said it's hard to pass up this incredible opportunity.
So why is Sprint so attractive? Cramer said it's because everyone has left the company for dead. "It's still priced as if it's going to disappear under its heavy debt load." And that's exactly why of the 25 analysts covering the stock, only five have it rated a buy, he said.
But there's a lot of reasons to like Sprint, he said. The company is staying profitable, adding new phones to its lineup and improving its customer service to help retain customers. Sprint also is doing well with its Boost Mobile prepaid phone plans.
Cramer said he's not worried about Sprint's debt, as the company generates over $3 billion in free cash flow. He said the company is a buy, especially when it's under $4 a share, and thinks shares will head higher as other analysts also see the light.
Off the Charts
Cramer again went head to head with colleague Rick Bensignor to examine the chart of Blackberry maker
Research In Motion
In a recent report, Bensignor said Research In Motion's chart was very positive, adding the stock could run to as high as $80 a share. The technical analysis revealed a "W" shaped bottom, along with an "island reversal," both bullish signs. The chart also just broke through both its downtrend line and its 200-week, not 200-day, moving average.
Turning to the fundamentals, Cramer said he too is bullish on Research In Motion. The company reported a better-than-expected quarter on April 2, beating Wall Street estimates by 8 cents a share and delivering better-than-expected guidance. The company is also adding subscribers and aggressively cutting costs that is leading to higher margins for the company.
Trading at just 16 times earnings, Cramer said Research In Motion deserves to go higher.
Outrage of the Day
Cramer once again took aim at the ultra short ETF market, and in particular, e
UltraShort Financial ProShares
, which he calls the "ETF of mass destruction" and needs to be banned.
The premise of the ProShares fund is that it allows investors to short the financials with twice the firepower, giving them $2 worth of shorting for every $1 investment.
So at a time when the financial index the fund tracks has fallen 67%, you'd expect the ProShares fund to be up 134%, twice that of the index. Yet the ProShares fund hit a fresh 52-week low today, he said.
Cramer said the problem with the ProShares fund is that the fund reindexes daily, making it only a tool for day traders to manipulate stock prices and not one for longer term investors. He said that the inner workings of the fund are buried in the prospectus, and that investors have been duped with hype and promotion.
Even if the fund works, Cramer wonders why would anyone want to short a passive basket of financials in the first place. He said you'd be shorting the best stocks, along with the worst stocks. He said shorting names individually would be the only way to make that strategy work.
Cramer again pleaded to SEC Chairwoman Mary Shaprio to ban the UltraShort ProShares fund, along with all others like it.
Cramer was bullish on
He was bearish on
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At the time of publication, Cramer was not long on any stock.
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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