Spare the Rod, Spoil the Cyclicals

Discipline is the trader's watchword when it comes to cyclical buys.
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Most mutual funds made a killing today. The old faves, led by

Cisco

(CSCO) - Get Report

, put on moves that were reminiscent of last year. Is this the beginning of a new trend? Could we be returning to The Stocks Everybody Loves?

I think something different is happening. I think for the next couple of days we will get some strength in tech, led by the health of Cisco. The networker's glow will bathe us until

Dell

(DELL) - Get Report

reports, and I expect good news there, too. (I am long both of them.)

In the meantime, the cyclicals will drip down, as this market does not seem to have the power to take up both groups at the same time. (Notice that the advance-decline ratio is always bad when TSEL advances!)

I have enough Cisco et al. Socked in that, I believe I will keep pace with this rally. The rougher thing is to not break discipline on these cyclical buys I am putting on. Let's take my

Dupont

(DD) - Get Report

buy. I put on my first 10,000 shares at 71. I did not use the down three-point break as a chance to get 50,000 in, which would be a minimum-sized growth position.

I didn't because the cyclicals are lumpy. I expect that some trend followers who jumped onto the cyclicals since the

Morgan Stanley Cyclical index

crossed 615 will now kick Dupont out. And if the bonds rally, as I think they will, this stock will fill in the gap of where it took off when it reported its upside surprise.

I will bid 70 for another 10,000 tomorrow and keep building on that position with a point scale. No sense being too aggressive into an obvious cyclical selloff. I would rather double down at 68 then I would get hooked now at 71 and then have to panic at 68 when Dupont would be the biggest position in my fund because I had bought so much at one level.

And I will let my telco tech do the talking for a couple of days.

Random musings:

I will make my trading gain or loss public on this bond trade to satisfy my

faceless Wyoming critic.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco, Dupont and Dell. 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

letters@thestreet.com.