The Hazards of an Early Rally

We're seeing some letup in velocity, but not enough.
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The first break in the velocity, so I make my first big buys of the day in the usual suspects. It would be reasonable to think that we stabilize for a while. But I can't go overboard. We are in that weird Friday mode, which means that we don't want the rally to start too early.

The hazards of an early Friday rally, one that starts at lunchtime, is that it leaves too much time for people to blow it out near the end of the day. That's a terrible situation for the bulls.

The tells continue to be just so-so.

3Com

(COMS)

couldn't hold, and that's really bad. A bunch of big prints went on in

Compaq

(CPQ)

and

Oracle

(ORCL) - Get Report

, two highly watched stocks, and they didn't hold. That's also a bad sign. No institutional buying at all to speak of. At all.

So, all that has happened is that we have seen some letup on velocity.

Not enough.

In the meantime, the talking heads chatter about how the cyclicals are doing well. These guys are doing the bidding for the brokers, the guys who tell you to rotate into these stocks because the economy is strong.

Well, the economy has been strong for some time, so I don't buy it.

In sum, too early for a rally, but not a bad time to stick a bid in or two. That's how I am betting. Oh yeah, and I am selling the cyclicals to spite the people hyping them on TV.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At the time of publication, his fund held no positions in the stocks mentioned, though positions 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 by sending an email to letters@thestreet.com.