Three Themes That Drive This Market

They cut across all sectors, and must be respected.

Author:: Jim Cramer
Publish date:: Jun 4, 2007 1:00 PM EDT

This column was originally published on RealMoney on June 4 at 12:14 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Revaluations continue.

We've got three overall themes to this market: takeovers/going private, revaluations and catch-up.

I want to distinguish these themes from the bull sectors -- aerospace, ag, minerals, oil and gas. I want to distinguish them because these themes cut across

all

sectors.

Today we are seeing a revaluations of a host of stocks:

General Electric (GE) - Get Report off of a Barron's article that says the stock is at last ready to run
Wal-Mart (WMT) - Get Report off the upgrades and a decision by management to buy back stock instead of growing uncontrollably
oil companies, which seem to get revalued upward on a regular basis
Google's (GOOG) - Get Report being revalued off the notion of failing competition from Yahoo! (YHOO) and Microsoft (MSFT) - Get Report

Each week we get the revaluations. We saw one last week for

Anheuser-Busch

(BUD) - Get Report

off a conference call. And we saw one for

Dell

(DELL) - Get Report

off the quarter. We are seeing a revaluation of

Moody's

(MCO) - Get Report

, which was perceived to be a hurting equity off of the possible dry-up of subprime issuance, but we know now won't be hurt much at all. Plus the leveraged buyout activities, as Merrill says in its upgrade this morning, are causing estimates to move up rather sharply.

Once the revaluations begin, they rarely stop. That's because the revaluations then propel the stocks to breakout levels that therefore become self-fulfilling.

Then, once a stock advances, like a Wal-Mart, people see that peers (in this case,

J.C. Penney

(JCP) - Get Report

Kohl's

(KSS) - Get Report

) are cheap and they play catch-up. We are seeing something like that happen right now in the oil and gas plays after the buy of properties by

XTO

(XTO)

If your stock can go up off a buy, then it has the ability to move

much

higher. This process mystifies a lot of people because it causes them to think that the market's leaving them behind. That's why I urge you to recognize that even intraday bad openings, like the one we got today, count as selloffs that can be used to get in, particularly when you see one of these themes.

How would I use this session? Well, if Wal-Mart's up I'd buy some

Lowe's

(LOW) - Get Report

Sears

(SHLD)

on the dip (and Sears is still dipping). Or I'd go buy some BUD, which was revalued last week. Or consider buying some

Halliburton

(HAL) - Get Report

, which is once again falling behind the group.

I have referred to these themes as reminiscent of the 1980s, when we saw revaluations for major American food and drug companies. That period lasted much longer than expected, when

Coke

(KO) - Get Report

and

Pepsi

(PEP) - Get Report

and

Merck

(MRK) - Get Report

and

Pfizer

(PFE) - Get Report

put on billions and billions of market cap.

Now that is happening again to other areas. I just think you have to respect how long that process went on and recognize that it is a relatively new phenomenon that isn't about to end now.

Random musings

Cigna's

(CI) - Get Report

buying aggressively in there every day and it shows. ... The multiples for

Starbucks

(SBUX) - Get Report

and

Whole Foods

(WFMI)

remain way too high. ...

Celgene

(CELG) - Get Report

should be up much more on this new Revlimid use.

General Electric owns CNBC, for which Cramer is a featured commentator. At the time of publication, Cramer was long XTO Energy, Sears Holdings and Freeport-McMoRan.

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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