RealMoney Radio Recap: Technically Speaking

Cramer says market patterns helped stocks bounce back on Wednesday.
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After a 100-point drop the previous session, the markets are trying bounce back, Jim Cramer told his

"RealMoney" radio show listeners Wednesday, adding that markets always move faster on the way down than on the way up.

"Why do we even have a bounce?" he asked.

"Whenever there is volatility, investors look for any totem ... anything that makes them feel less lonely, less fearful. And that's what technical analysis is about. And that's why technical analysis is leading the charge for the bounce today," he said.

Cramer described technical analysis as a study of patterns that allow market technicians to divine the market's next move. They look at the chart of where the market has come from in order to forecast movements based on past trends, he said.

Even though he doesn't use technical analysis as the basis for his trades, Cramer said that this information is helpful. For example, the

S&P 500

went down a lot last week, and when the market fell on Tuesday, it hovered near that same level.

The technicians saw that the old low level held its ground yesterday, so the market found some support, people decided it could be OK to get back in and stocks bounced back today, he said.

Don't get greedy during these technical rallies, Cramer said. He believes that investors should sell a little into this strength. "I really and truly think that when we have any snapback rally, you have to unload," he said.

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"This is not a great market," he said, adding that there is no leadership and that market action has sometimes been led by speculation .

He likes markets that go up on fundamentals, so he said he is using this small rally to take a little off the table in his own portfolio,

Action Alerts PLUS.

Ogling Oil

With crude prices coming in, now is an opportunity to pick up an oil stock for cheap, said Cramer.

In order for this to be a profitable strategy, crude prices need to stay high. And Cramer believes this will happen, even if they ease slightly in the near term.

For starters, "Iran still continues to be a problem," he said, despite ongoing negotiations with the U.S. Plus, he said Venezuela has managed to get

Occidental Petroleum

(OXY) - Get Report

kicked out of Ecuador, which is why he sold his position in the stock for his charitable trust

Action Alerts PLUS.

In addition, Nigerian rebels have cut off a big chunk of supply coming from that country, and he said he has "no conviction" that the nation will be able to stop the rebels; and Iraq is not producing oil as it once did.

Alternative fuels have not yet reached a mass scale, he said, adding "if you know how little

energy these options produce, I think you'd be really depressed, so I'm not going to get into it."

In the next year or two, he said he would be shocked if oil does not hit $100 a barrel. And if that happens, he said that investors without oil stocks won't do well and will regret it.

Sad Stories

Cramer said that he had two stories to point out -- "one bad, and the other, worse."

While he believes that buybacks are often good, they're usually trouble if a company has to borrow money to buy back its own stock. He likened this to taking out a home equity loan when you're maxed out on cash.

And he said that this is the foolhardy move that

Tribune

(TRB)

just made.

The company's fundamentals are "frankly awful," he said. "What do I want from Tribune? I want growth. If you can't give me growth, shut up." He said that he would use any strength in the stock as an opportunity to sell.

Cramer said that his second sad story is that of "

Vonage

(VG) - Get Report

the dog.

"This is the first time I've ever seen an IPO botched this badly," he said, noting that it lost more than 20% in the first four days of trading.

The company is treating shareholders that use Vonage better than shareholders that don't, he said. "So ,in other words, if I use the phone system, I'm guaranteed. And if I just like idea of Vonage, I'm screwed."

He said that this is foul play and that all shareholders should be treated equal.

Cramer's Callers

Even though

Nabors

(NBR) - Get Report

just took down debt to buyback its shares, Cramer told a caller that he shouldn't worry too much.

The company's management is committed to shareholders, Cramer said, but he added that he's not impressed by what the stock has done since the buyback was announced. He owns Nabors for this charitable trust

Action Alerts PLUS.

However, Cramer said that the company is the premiere driller for hard-to-reach places, so he isn't giving up on it.

He agreed with a caller that

Cummins

(CMI) - Get Report

is the "biggest and best

diesel engine manufacturer in the world," attributing the recent spike in short shares to upcoming changes to environmental regulations.

Up until 2007, it will be legal to buy a kind of engine that will soon be restricted, Cramer said, adding that short-sellers believe a lot of big trucking companies are putting orders in now to get away from the improved engine that will soon be released.

Cramer said that this would steal demand from 2007 orders.

If Cramer owned the stock, he would let a little go. The company will probably have three good quarters in 2006, and then get hammered at the end of the year, he said.

Cramer has often said that he doesn't recommend Chinese listed companies because he can't trust the numbers, so a caller asked if he would buy a Hong Kong listed company such as

China Mobile

(CHL) - Get Report

.

The ADR trades on the

New York Stock Exchange

, and the company trades in Hong Kong under the ticker CHLKF.HK.

Though the company is based in Hong Kong, Cramer said that he still doesn't trust the numbers.

For a wireless play, Cramer said that he would rather hold

Qualcomm

(QCOM) - Get Report

, which he bought for

Action Alerts PLUS. The company has not yet penetrated China, but it's the standard in Europe and Asia, he said.

"No one's going to like this politically incorrect thing I'm about to say, but as long as that woman Anne Mulcahy is running things, I don't like the stock," Cramer said, referring to

Xerox

(XRX) - Get Report

.

Things are better than they used to be, but "better than used to be doesn't cut it," he said, adding that he would swap it for

Hewlett-Packard

(HPQ) - Get Report

.

"No, no, no. We don't' want

Martha Stewart

(MSO)

stock," Cramer said, adding that magazine companies in general are in trouble. He said he would take advantage of this strength, ring the register and move on.

Investors tend to look at

Terex

(TEX) - Get Report

,

Caterpillar

(CAT) - Get Report

and

Deere

(DE) - Get Report

before they get fired up about

Manitowoc

(MTW) - Get Report

, Cramer said. So even though the company's fundamentals are very good, "perhaps tomorrow is Manitowoc's day."

He said that the most compelling thing about

Sony

(SNE) - Get Report

is the fact that the company has rolled personal computing capabilities in with its game console.

"I frankly am intrigued by this," he said. The Japanese market has been down for days, and Cramer said that Sony could rise when the overall market bounces. However, the only Japanese stock that he owns for

Action Alerts PLUS is

Mitsubishi UFJ Financial Group

(MTU)

.

He said that it makes sense that

Sirius Satellite Radio

(SIRI) - Get Report

is beating out

XM Satellite Radio

(XMSR)

, given the fact that XM dramatically missed its most recent quarterly estimates.

Plus, Sirius is run by Mel Karmazin, who Cramer called "money in the bank." Now that the stock is near $4, he said that he is more bullish on it, but that he would ring the register once it hit $5 or $6.

He believes that business is good for

Ciena

(CIEN) - Get Report

, but that its entire sector is behaving poorly.

In this tough situation, he said that he would sell half of his position on the current strength, and let the rest be until the company reports earnings Thursday.

Likewise, he said he would let a little

Oregon Steel

(OS)

go because it is rising on the market bounce.

However, he also said that the company makes steel used in pipelines and rail, and that he can't think of two better businesses to be in.

Finally, he told a caller that

Walgreen

(WAG)

is a "best of breed" company. Why do we care if a company is the best in its class? Because knowing that the fundamental story is intact and terrific "gives us the conviction to buy more and not turn tail," he said.

The stock is at its 52-week low, the company is growing at 15% and the shares sell at 23 times earnings, so Cramer said he would be a buyer of Walgreen.

At the time of publication, Cramer was long Nabors Industries, Qualcomm and Mitsubishi UFJ.

Jim Cramer is a director and co-founder 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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