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I Like the Banks. Here's Why

Y2K spending's about to drop. The trader also likes the telcos.
Author:

Discouraging day -- for the bears! Here we are with a serious blow to the psychological leader of this market, Dell (DELL) - Get Report, and people are just finding new areas of opportunity. As if by magic.

Me, I like the banks. Let me give you my thinking. First, Japan looks like it is bottoming. For some reason, well-documented in this morning's

American Banker

, Japan's strength correlates strongly with the banks'. Second, in that very same issue, there is an article that talks about how the Y2k spending, which has killed the banks, is concluding. That could cause earnings to ramp, particularly for the banks that have made many acquisitions and have had to integrate many different systems.

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I also like the telcos, and think that if people like tech, they will like the telco portion of tech more than the PC portion. Right now the market is saying I am wrong, and it is just shrugging off Dell entirely.

I wish I could be that glib. I wish I could just say, hmmm, Dell, that's what we have all been waiting for and I can now load the boat up with PC and PC-related names. But that is too illogical for me. (Although not obviously for others.)

That doesn't mean I don't want to play. It just means that if they take all of tech down, or if Dell is discounted, I think the first to come back will be networking/telco equipment. To these ends I am glad to see that

3Com

(COMS)

, which started this whole selloff, has stabilized. That could be a very important tell.

In the meantime, I reiterate my earlier

judgment about this market: WOW!

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication the fund was long Dell calls, though positions can 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 by sending an email to letters@thestreet.com.