Cramer: Give the Bull Its Due
This blog post by Jim Cramer originally appeared on RealMoney.com Monday.
Never, ever has it taken me this long to read the charts that come hand-delivered to my house every Saturday morning. And it is not just because I just came back from a whirlwind tour of Israel, Jordan and Egypt. It's because when I go over the charts I am always looking for juicy ones, ones that tell a story, that signal where the action is, where the money's going to.
I dog-ear the pages and mark 'em like I am back in law school, no better than that cause I got a cushy job in year two so I didn't have to dog-ear much in the third year.
There are four charts to a page and I usually like to fold the page up or down depending on the corner. But I saw so many good ones that I resorted to ripping middle pages so I could come back to re-circle and figure out what the heck these patterns are saying.
And you know what? They are saying that now that health care is done, finished, complete, we are ready to roll with employment growth and with a Congress that is no longer pathetically locked into a negative mode. Does it mean that the rest of the negative agenda for business may be upon us? I am developing strong views on this. If the likes of
Verizon
(VZ) - Get Report
and
Deere
(DE) - Get Report
and
Caterpillar
(CAT) - Get Report
are taking the hit and their stocks continue to power to new highs, maybe it just doesn't matter. Maybe the recovery is going to be so strong that we don't have to fret about Washington nearly as much as we thought.
Why?
The charts tell us the story. The folded and mutilated best-in-show charts include all sorts of groups that are totally discretionary in spending, a sure sign that something is happening with the consumer that is nothing short of miraculous. Of course, retail is strong, particularly the once scorned ghetto of teenage apparel:
Gap
(GPS) - Get Report
,
Abercrombie
(ANF) - Get Report
,
Urban Outfitters
(URBN) - Get Report
and
Aeropostale
(ARO)
. That means parents are giving their kids money again. But so are the regular apparel places, like
Jones Apparel
(JNY)
and
VF Corp.
(VFC) - Get Report
As well as the shoe biz, with
Foot Locker
(FL) - Get Report
,
Nike
(NKE) - Get Report
and
Dick's
(DKS) - Get Report
. I can't include
Finish Line
(FINL)
or
Sketchers
(SKX) - Get Report
because they aren't in the chart book but any perusal of those two tells you that people are spending like wildfire on things they don't need.
Speaking of wildfire, have you looked at the charts of
RadioShack
(RSH)
,
Best Buy
(BBY) - Get Report
,
Harmonic
(HLIT) - Get Report
,
Sony
(SNE) - Get Report
, and
Corning
(GLW) - Get Report
? Tell me you would step into those places and buy a good entertainment system for your car or home if you weren't feeling better than the media says you do.
Or how about where people are shopping for expensive goods, ones that you buy when you are rosy in outlook:
Tiffany
(TIF) - Get Report
,
Whole Foods
(WFMI)
and
Williams-Sonoma
(WSM) - Get Report
? How else can you explain those new highs? I have no answer. I don't have one for expensive places like
Coach
(COH)
and
AnnTaylor
(ANN)
, either.
You would expect that if the pricey joints are rocking you won't see much spending at the poor house, but how can you explain the
Family Dollar
(FDO)
,
Dollar General
(DG) - Get Report
and
Dollar Tree
(DLTR) - Get Report
rallies? Fakeouts?
How about places you go when you aren't going to be kicked out of your house because of changes in the mortgage foreclosures being put in effect by the federal government, changes that at last look like they will work, especially if you judge the bull market in land as represented by
Plum Creek
(PCL)
and
Weyerhaeuser
(WY) - Get Report
, the two biggest landowners?
Going out? The charts of
Brinker
(EAT) - Get Report
,
Darden
(DRI) - Get Report
,
Yum!
(YUM) - Get Report
,
Cheesecake Factory
(CAKE) - Get Report
say you do.
Taking a vacation? Looks like people are hitting the road big time, with airlines like
AMR
(AMR)
and
Continental
(CAL) - Get Report
and cruise lines like
Royal Caribbean
(RCL) - Get Report
and
Carnival
(CCL) - Get Report
, or hotels like
Marriot
(MAR) - Get Report
and
Starwood
(HOT)
. Or destinations like
Disney
(DIS) - Get Report
, and stops on the way like
Cracker Barrel
(CBRL) - Get Report
.
If travel's back the plane companies don't have enough planes to handle the new customers. Perhaps that, and the stubborn problems at
Airbus
, are driving one of the best bull markets out there, with
Boeing
(BA) - Get Report
,
Goodrich
(GR)
,
Ametek
(AME) - Get Report
,
Rockwell Collins
(COL)
,
Allegheny Tech
(ATI) - Get Report
, and
Honeywell
(HON) - Get Report
all in a bull market conflagration.
They are one-for-one with the industrials that are hitting 52-week highs, the ones that should be dreading the Obama agenda:
Eaton
(ETN) - Get Report
,
SPX
(SPW)
,
Ingersoll-Rand
(IR) - Get Report
,
Parker-Hannifin
, Caterpillar,
Rockwell Automation
(ROK) - Get Report
,
Emerson
(EMR) - Get Report
,
United Tech
,
3M
(MMM) - Get Report
,
Cooper Industries
(CBE)
,
Dover
(DOV) - Get Report
and
W.W. Grainger
(GWW) - Get Report
.
Some of that has to do with autos, I am sure, as that category is demonstrating strength through the remaining players in the books:
Johnson Controls
(JCI) - Get Report
,
AutoZone
(AZO) - Get Report
,
O'Reilly Automotive
,
Magna
(MGA) - Get Report
and
CarMax
(KMX) - Get Report
.
You have to ship the parts, and the rallies in
FedEx
(FDX) - Get Report
,
CSX
(CSX) - Get Report
,
United Parcel
(UPS) - Get Report
,
Norfolk Southern
(NSC) - Get Report
and
Union Pacific
(UNP) - Get Report
confirm it's happening.
The market has spoken about health care: the more customers, the merrier, which means anything with the word health in it, whether it be a REIT or a testing company as well as the HMOs, like
Aetna
(AET)
, and anything hospital or body part, like
Stryker
(SYK) - Get Report
, can't seem to be kept down. Look out for pricey homecare companies like
Lincare
(LNCR)
, because it looks like the government's going to back them in a big way.
Speaking of government backing, no sign of a let up in defense spending, so
General Dynamics
(GD) - Get Report
,
Northrop Grumman
(NOC) - Get Report
and
Lockheed Martin
(LMT) - Get Report
continue their seemingly endless moves higher.
Few markets are as strong as the insurance companies that were supposed to be wrecked by their real estate portfolios:
MetLife
(MET) - Get Report
,
Principal Financial
(PFG) - Get Report
,
Lincoln
(LNC) - Get Report
,
Genworth
(GNW) - Get Report
and
Hartford
(HIG) - Get Report
are great examples.
So are the mortgage insurers, left once for dead, now powering mightily forward:
MGIC
(MTG) - Get Report
and
Radian
(RDN) - Get Report
being the best examples.
Back from the dead? How about dancing? The regional banks are joining the dance with
BB&T
(BBT) - Get Report
,
PNC
(PNC) - Get Report
,
Fifth Third
(FITB) - Get Report
,
Huntington
(HBAN) - Get Report
,
Comerica
(CMA) - Get Report
,
Capital One
(COF) - Get Report
and
Zions
(ZION) - Get Report
among the strongest.
With taxes going up people seem to want annuities to protect themselves. How else to explain the sudden take-off of
T Rowe
(TROW) - Get Report
,
Franklin Resources
(BEN) - Get Report
,
Legg Mason
(LM) - Get Report
, and
Janus
(JNS)
.
Sure there are laggards, notably tech, save
Apple
(AAPL) - Get Report
and some fast Internet plays, like
Akamai
(AKAM) - Get Report
,
F5
(FFIV) - Get Report
and
JDS Uniphase
(JDSU)
. The semis are in the balance, the software makers stuck.
Incredibly, one of the worst groups is the oils and the oil services. They are poor performers, perhaps because of the leverage to natural gas. The drillers levered to it show that, as do the main users, the utilities, and the plastic companies:
DuPont
(DD) - Get Report
,
Dow
(DOW) - Get Report
,
Eastman Chemical
(EMN) - Get Report
,
PPG
(PPG) - Get Report
and
Olin
(OLN) - Get Report
.
Can you imagine if they caught fire? The only stocks left not to move would be the totally-out-of favor consumers staples like
Procter
(PG) - Get Report
and
Kellogg
(K) - Get Report
and
Coke
(KO) - Get Report
, although
Pepsi
(PEP) - Get Report
inches higher.
Put simply, this is a remarkable run, embraced by about a half-dozen people I read and hear on TV. I know it's been hard to stay long. I got cold feet on the industrials believing that the health care plan would hurt them. That was plainly wrong. Worried about labor's powerful agenda and cap-and-trade, I got worried about the consequences of retailers like
Wal-Mart
(WMT) - Get Report
and banks like
Bank of America
(BAC) - Get Report
, for unions, and the industrials for emissions.
Looks like all nonsense now.
Finally, we are coming in the least overbought we have been in a while. That means that most of these stocks still present an opportunity to buy.
Maybe some charts lie. Maybe some sectors are fibbing.
But to now acknowledge the power of this bull is to be, well, as I used to say in this column, WRONG.
Give this one its due. It ain't finished and it has a lot more converting to do, especially if 25% of the market, tech and oils, come to play.
Oh, and S&P, can you send me a new chartbook? Mine's too dog-eared now to use!
At the time of publication, Cramer was long Apple, Bank of America, Honeywell, Johnson Controls, Pepsi, Procter & Gamble, United Parcel Service and Weyerhauser.
Jim Cramer, co-founder and chairman of TheStreet.com, writes daily market commentary for TheStreet.com's RealMoney and runs the charitable trust portfolio,
. He also participates in video segments on TheStreet.com TV and serves as host of CNBC's "Mad Money" television program.
Mr. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. He worked as a journalist at the Tallahassee Democrat and the Los Angeles Herald Examiner, covering everything from sports to homicide before moving to New York to help start American Lawyer magazine. After a three-year stint, Mr. Cramer entered Harvard Law School and received his J.D. in 1984. Instead of practicing law, however, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Mr. Cramer helped start Smart Money for Dow Jones and then, in 1996, he co-founded TheStreet.com, of which he is chairman and where he has served as a columnist and contributor since. In 2000, Mr. Cramer retired from active money management to embrace media full time, including radio and television.
Mr. Cramer is the author of "
Confessions of a Street Addict
," "You Got Screwed," "Jim Cramer's Real Money," "Jim Cramer's Mad Money," "Jim Cramer's Stay Mad for Life" and, most recently, "Jim Cramer's Getting Back to Even." He has written for Time magazine and New York magazine and has been featured on CBS' 60 Minutes, NBC's Nightly News with Brian Williams, Meet the Press, Today, The Tonight Show, Late Night and MSNBC's Morning Joe.
