Jim Cramer fills his blog on
every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- the perils of shorting this market,
- trouble for the perma-bears, and
- good news that propels us higher.
for information on
, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.
You Want to Short Here? Good Luck
Posted at 8:44 a.m. EDT, April 6, 2009
What can be shorted here? Heaven knows things have run, but it's a tough game to short if only because of where we are in the cycle: Pretty much anything can be justified for owning here, whether it be the beaten-down drugs with their powerful yields, or the steels given their possibilities ahead -- even if somewhat muted by fact -- that stimulus will kick in.
One could argue that we could see a repeal of the retail move given how far and how fast it has occurred. Consider, for example,
. Does anyone think that Coach is actually doing well? It's more than 50% off its low. But it has been cut in half from the high and it is a great company. The idea that it can recover and year over year do well is hardly fanciful.
off the bottom and is up 46% for the year. But it is
40% year over year, and the possibility of a
bankruptcy could be as powerful for it as
has been for
. And what about Best Buy, which has rallied far more than any other retailer? There, too, you have to be careful. New TVs because of digital changes and HD, and Circuit City's demise could really get BBY going despite its run.
seems to have moved tremendously vs. how it might be doing. But it was forced down by naked shorts, and I think that despite all you hear about how poorly run it is, the company did better than expected last quarter ... and it's not as if the other companies are doing spectacularly.
, as they are classic refi plays, and if card check is off the table,
is an out-and-out buy.
The same exercise can be performed for a lot of industries.
, which I think is having a miserable quarter, has run a lot, but unless it cuts its dividend and warns of a loss, how do you know you aren't shorting
at $35? You'd have to do it as a paired trade with something, maybe
, with a like-for-like yield. Or
Illinois Tool Works
, which is performing terribly.
? I just don't buy the short story, because you are not going to make this great manufacturer into a mid-cap stock, which is what would have to happen to hit a home run. It's moved too much, but what are you going to do, make 3 points? I wouldn't short any of the other major industrials:
. They are levered to any worldwide pickup, and you have too many managers betting on one to have the stocks not move.
The dopiest ones, the ones that have rallied without any underpinnings --
Black & Decker
(which I have sold for
-- all seem shortable and likely to have short falls, but there are too many people who would leap on them as refi plays.
The transports have had monster runs, but they are so low vs. where they were that I would be frightened to put them out, especially with a resurgent China. Take
. This is one, I can tell you, where the shorts vilified me when I did my episode on glass one-quarter full, when FDX was at $43 after a horrid quarter. Longtime CEO Fred Smith made his bottom call, and the Street bought it. The next day it dropped a buck and half and the usual critics came out of the woodwork to knock my theory. It's been 8 points straight since then, and while I don't think anything's changed for the better -- like so many other stories -- I don't know what can bring it down. They sure aren't going to warn. You need
to say something negative to make that happen.
Sure is tempting to go after aerospace and defense. The stocks have run, they have no friend in Obama, Afghanistan is
Iraq when it comes to a shooting war, and no allies seem to want to pursue it either. The big programs are in Obama's cross hairs. In the case of
, you don't hear a lot about orders. I could see putting that one out.
I have said habitually that the leaders from last year's first half, nat gas and ag, should be sold. I think you will see horrid quarters and stretched balance sheets for
nat gas company ... but then again, you are dealing with stocks that are down huge. Still, the price of nat gas is so low these companies simply have to show horrid numbers. I don't think the drillers will be much better, although at $50 oil they aren't as expensive as if oil were at $40. If the commodity goes down I would go after them,
I am totally scared to short tech. The charts here show monster runs, just
, and I think the quarters aren't going to be that good. But every time we come out of recession, the playbook for growth mutual fund managers is to buy these stocks
the fundamentals turn around. There is no way the
of the world are going to avoid this group. Just too hard.
When I looked through the charts this weekend I was amazed at how ugly all of the drug stocks are. But everything that has turned these last four weeks had stunningly horrible charts, and I think the time to buy these stocks, when quarterly earnings look good, could be at hand.
at 3.5% yield's too cheap. All of biotech is rolling over, and I want in because I believe these companies should sell at premiums vs. the rest of the market for their surprise new drugs.
The soft drink and food stocks would be layups to short if their commodity hedges didn't roll over, because they are just plain still expensive. I don't like
anymore because the price of cigarettes is too high, but how much are you going to make shorting a stock with an 8% yield that can boost the dividend?
may be ending their price war.
... too cheap for me to put out.
There are tons of other groups out there but I think the best place to short might be in the financials but only after they run more. I think defaults for
will be nightmarish. It is the small-business lender, which is a tough place to be. The regional banks, the
, can't be trusted. I think we will all be focusing on nonperforming loans,
marking, when the quarter is reported, as FASB has made marking an individual business thus too hard to call.
So, all of these areas are without clear shorting prospects. In the old days, then, I would just go buy deep-in-the-money puts of the
because it seems so hard to find the easy ones ... if there are any.
At all times when shorting here, though, remember that all that has to happen is we get one figure that shows not a bottom but an
, and all shorts go awry except for those on the food and drug sector and those won't go down all that hard because the buyers of these stocks and the remaining holders have all been shaken out and only stronger hands remain.
At the time of publication, Cramer was long Wal-Mart, Home Depot, Abbott and Pepsi.
Change Is Coming to Rock the Perma-Bears
Posted at 2:16 p.m. EDT, April 8, 2009Two things have not occurred yet, two things that will destroy the argument of the bears, the Roubinis of the world
they happen -- not if but
they happen. The bears will not be willing to recognize these changes when they happen. They will not be able to readjust.
Change No. 1 will be when a company actually says it is doing "better than expected" because the economy is better. In other words, not something like a
Research In Motion
, which is beating lowered estimates. Not something like
, which simply have baked in bad news.
And change No. 2 will be when the stimulus, which is considerable, kicks in. Think of it: We haven't seen any stimulus filtering through; none of the $800 billion has seemingly mattered yet.
What happens what it does? What happens when we see that money filter through? You think
is up now, or
. You think that
Bed Bath & Beyond
are up a lot. Can you imagine when that stimulus hits the economy?
Look what happened when China's stimulus hit. You picked up 40%.
Now I know that there are a
of wrong things that are occurring. I was let down by TALF. The banks needed a change in marked-to-market to look better, because things are so bad. The insurers needed the capital, because they are much worse than we thought. The bulk of earnings estimates are too high, and even the outlook is gloomy for many companies.
That said, you have to understand that when the economy changes and gets better, you will not get into this market in the
6000s. That just most likely won't be possible.
So let's keep it practical here. These two changes are
to occur. And when they do, you will most likely to have to reach up, not reach down, for stock.
At the time of publication, Cramer was long Home Depot.
This Market Just Loves Good News
Posted at 10:42 a.m. EDT, April 9, 2009
They let you in for a couple of days. They gave you a chance.
But now, again, the chance is gone.
Shallow pullbacks are signs of bull markets. Signs that things are better -- jobless claims, takeovers and now
-- are greeted with a level of optimism that shocks the bears and causes a total shift from ETFs that blast banks down to ETFs that blast banks up. So
Bank of America
becomes Wells Fargo because the two are about mortgage originations, and they now own the mortgage origination market because the government let them buy companies that looked terrible on paper but now may have upside, particularly when they don't flag the nonperformers.
gets remembered as
, and that can ramp that stock, too.
When you factor in that Nouriel "Never Wrong" Roubini -- good new name for him -- and Mike "Big Splash" Mayo had just urged people to short the names, you get a true conflagration that's going to burn all day.
Meanwhile, it gets so hard to make money on the short side in the industrials because everyone's itching to upgrade them because they see the action. And the action is an
that doesn't go down on horrid numbers and miserable guidance, or a
that declares a dividend that no one counted on and can ignite buyers.
Any good news = much higher prices. It's a simple equation.
At the time of publication, Cramer was long Wells Fargo and JPMorgan.
Jim Cramer is co-founder and chairman 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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