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Artificial Intelligence

When program buying skews the market, it's hard to separate the good stocks from the bad stocks.

The toughest thing about days like today is the pure artificiality of it.

We know, for example, that


(CSCO) - Get Cisco Systems, Inc. Report

wasn't rallying 7 points because someone got all fired up about a big fat router. We know that Cisco, a week before a quarterly report, isn't talking. This is a company that plays by the rules. It's tight as a drum at Cisco right now.

It was pure program buying that drove it.

But here is our favorite stock rallying a lucky 7 and what are we supposed to do? Today at 3:45 p.m. we had the most surreal debate on the trading desk. Some of us wanted to sell stock at the bell with the idea of buying it back lower once the buy program was completed.

Others, namely me, regarded it as heretical. I am willing to bet that either through artificial program buying or through real demand, Cisco will see these levels again -- if not go higher. So what is the point of selling?

We compromised and let a little go.

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In markets that are heavily driven by programs because the program buyers and sellers are machines that don't have to be sensitive to price or discipline, it is extremely difficult to keep good stocks on.

The real challenge is to keep your good stocks and sell your losers, or the ones that can't move if everything goes right. You think you can buy these stocks lower after the programs are completed but sometimes you


get a chance to buy back the good ones.

We know that Cisco is a stock that trades in clumps. Other than that miserable pullback on Oct. 7, 1998, a result of that wrong


downgrade, there hasn't been much of an opportunity to sink your teeth into some cheap Cisco. All of the big clumps have been like today, when the stock looked like it would never look back.

So we were torn today. As I write tonight on the way home from work I worry about many things, but my biggest worry is that Cisco


retreat and I won't get to replace that stock I sold at the bell.

Guess you can say that's a high-quality problem.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at