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NEW YORK (
) -- Not all progress is good for mankind, Jim Cramer told his
show viewers Tuesday. He was responding to a recent report by the Chicago Federal Reserve that acknowledged the threat high-frequency trading represents to the individual investor.
Cramer said that genetically modified seeds were once touted as "progress," but now the country is rejecting them in favor of all-natural, organic products. Nuclear power was also praised as "progress," until the Three Mile Island and Fukushima disasters convinced people otherwise.
So it should come as no surprise that high-frequency trading, the kind that caused the "flash crash" and almost bankrupted
, is in the same situation.
Individual investors understand there are risks associated with investing in stocks. There's a sense of "acceptable risk," said Cramer, and investors can wrap their heads around things like the events that caused the dot-com collapse of 2001 and the financial panic of 2008, for example.
But when it comes to high-frequency trading, individuals have no idea what they're up against. The algorithms are far too fast and far too powerful for even the most seasoned of investor to understand.
Unfortunately, the Chicago Fed is not the agency to do anything about the problem, said Cramer. Only the Securities and Exchange Commission can make changes like reinstating the uptick rule to limit short-sellers or ban the double- and triple-levered exchange-traded funds that serve no purpose other than catering to the high-frequency crowd.
Thus our market system will continue to sacrifice integrity and transparency in favor of speed and "progress."
Off The Charts
What is the market's next move? Cramer went "Off The Charts" with his colleague Carolyn Boroden to find out, as the duo looked into the chart of the
Back on June 12, in the middle of the European-induced doom and gloom, Boroden made a bold call that the S&P had indeed bottomed. Her target for the S&P at the time was 1464.
That's why it pays to listen to the "hot hand," said Cramer, because the S&P 500 shot past Boroden's target earlier this week.
So what does Boroden think now? She's more cautious at current levels based on past performance. Boroden noted that in the 60 months from its lows in 2002 to 2007, the S&P moved higher by exactly 807 points. In the 42 months since the index hit its lows in 2007, the S&P has also now moved exactly 807 points.
Boroden said that she would be a buyer of the S&P, but only on a pullback and only if the index holds above the 1396 level. If the S&P can make it, then her short-term targets are 1484 and 1518, modest gains, and a longer-term target of possibly 1823, which would be a 25% gain.
Cramer said that while he doesn't rely solely on technical analysis, over the past six months Boroden has been spot on.
Most losers and laggards in the market stay that way, but every once in a while investors can uncover a gem, Cramer told viewers.
He highlighted apparel maker
as another potential breakup story with lots of upside. Cramer said while company management has made no mention of a breakup thus far, splitting itself up would make a ton of sense and profits.
Warnaco currently holds the license for Calvin Klein underwear, along with others for brands Speedo, Chaps and Olga as well its own line of Warnaco products. But the company has been struggling as of late, with its shares falling flat while those of
, which owns the rest of Calvin Klein, are up 39% for the year.
Cramer said PVH would be a natural buyer for Warnaco's Calvin Klein business, and the company has the money and credit to make the deal possible. He estimated PVH could take Warnaco's $100 million Calvin business to over $500 million by 2014 alone. That would leave Warnaco with a stable of other great brands, like Chaps and Speedo, which could be sold at a premium to the likes of
, another stellar manager of apparel brands.
Cramer said adding up all of Warnaco's assets would take shares dramatically higher than where they trade today. He only hopes company management is listening.
Here's what Cramer had to say about callers' stocks during the "Lightning Round":
: "I like Lululemon. They are a well-run company."
Magnum Hunter Resources
: "This is a spec on oil going back to $120. That's where this stock would hit a new all-time high."
: "This is part of a complex that's being sold. That's a mistake. They should be bought right here."
Hain Celestial Group
: "Hain did a good job and delivered. I like that story."
: "I want you to be big in Wells Fargo. They have 30% of America's mortgage market. Pull the trigger right here."
: "It's good, but
is the best. I'm going to say don't buy and wait for a pullback."
Cobalt International Energy
: "It's still up for the year but oil has to go up big for it to work. Let's wait for crude to comeback, then this stock will come back."
: "I like their acquisition. I want to pull the trigger tomorrow."
: "People don't like aerospace, but that's wrong. I think under $80 you have a big opportunity."
In the middle of this year's conference season, Cramer highlighted what he called his favorite one of the year, the UBS Global Life Sciences Conference, which gets under way Wednesday. He provided viewers with a outline of what to expect during the presentations, which are usually available via webcast.
remains a favorite and he's anxious to hear about the company's new indications for Botox and get an update on its pipeline of new products.
will also be presenting, and Cramer said that stock is not done going higher despite its recent 10% move up.
Cramer was also bullish on
, another favorite biotech with a terrific pipeline of new drugs on the way.
Cramer was less enthusiastic about
, three companies that have become too hot to handle.
As a speculative play, Cramer noted
, a stock that's up 25% for the year. He said the company's two orphan drugs should be receiving news next month, so there's no hurry for investors to buy in on Wednesday's presentation.
Finally, Cramer was bullish on
, one of the few biotechs with a five-year plan and one that trades at just 25 times earnings with a 32% growth rate.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer responded to the surprising $5 drop in oil futures at the end of trading Monday and the resulting drop in many oil service stocks.
Cramer reminded viewers that between 2008 and 2009, the price of oil fell by almost $100 a barrel. Yet, during that same time almost no oil-related projects got canceled. Why? Because oil companies take a long-term view and there simply isn't a glut of oil anywhere on the planet.
Cramer said the selling in
National Oilwell Varco
is just wrong and he expects both these names to rebound in a few days.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer's Action Alerts PLUS had na position in WFC.
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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