Like so many other times in my career I am sitting here trying to figure out what can go right with the
Dow Jones Industrial Average
. Remember my philosophy: I have never made a lot of money being a pessimist, I have made a ton of money being an optimist, so I have no choice but to think optimistically until it begins to hurt my cause. (Oh yeah, my cause is not to intellectualize the market or rationalize a particular position. It is to make money. )
So let's go to the checklist:
1. We need to see some softer data. Urgently. If we get any cooling in spending, we will get a huge ramp in the Dow because it would mean that the
would finally take a break from the relentless interest-rate rises. (Much of the Dow is leveraged to short rates.) Without this happening, all rallies will be opportunities to sell. We could get weak retail sales at the end of the week but February sales tend not to matter, so don't get hopes up too much.
2. We need to see a resolution to the
strike. Too many of the Dow companies are leveraged to this one giant aircraft manufacturer. It has to be resolved and done so in a way that produces more planes more quickly.
3. We need to see some banking consolidation. This weekend on "TheStreet.com" TV
show, my colleague
said we could be in for a takeover in the banking sector. Let it be a Dow bank, please.
4. We need to see a settlement in the
case. The longer this goes, the higher the stakes and the less likely that the government's punishment will benefit shareholders.
5. We need to see oil lower. Many of the Dow stocks are users of oil (the old Dow had more producers) and few benefit from the high price of oil. We get this oil lower and we get an explosion to the upside.
One of the reasons why I called a bottom-in-sight for the Dow on the TV show is I think the bulk of these five could work out. It doesn't pay to be a bear on the Dow down here. It just won't make you any money.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Microsoft. 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