Remember that unnatural strength yesterday in the telecos and the drugs? I am putting two and two together with
column that was just posted. That strength might have been because of the pricing of the HOLDRs that
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That explains why
moved so strongly, as well as the unnatural strength in
American Home Products
. They have been dropping precipitously from the opening.
These derivative securities, put on behind the scenes, can really fake you out. You might have thought that something was going on in the telecos and bought some, only to discover that the HOLDRs did the moving. (Merrill has to buy the stocks ahead of time to be able to sell the units. )
At this point, I think the pop and subsequent decline are not priced in, and we are buying some of the drugs at these reduced prices.
: Lot of stocks still suffering from the pricing of secondaries above the market. But a lot is also priced in by this decline.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Bristol-Myers Squibb and American Home Products. 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