Jim Cramer blamed "too much optimism" for the market's sharp downturn on his
"Real Money" radio show Friday. "There are so many optimists that we ran out of bulls to buy," Cramer said, referring to the "Investors Intelligence" survey, which has been overwhelmingly bullish as of late. Strong bullish sentiment is often viewed as a contrary indicator foretelling weakness. When people are too bullish, it takes a lot to move stocks higher, Cramer noted. For example, in the transports, Federal Express ( FDX) reported earnings Thursday that were a "little off kilter" and the stock sold off. But UPS ( UPS) and Yellow Roadway ( YELL) quickly came out and said they were sticking with previous estimates. Due to the market's psychology, Cramer said, they rose only modestly. Likewise, instead of focusing on good news about having a pair of bidders for Unocal ( UCL), Cramer said Chevron ( CVX - Get Report) fell because people mistakenly thought China was running out of oil. Cramer advises traders to use the calm to raise cash because "ultimately the wall of worry will be rebuilt." In the meantime, Cramer says the time is right to buy boring secular growth stocks like Altria ( MO - Get Report) and P&G ( PG - Get Report) instead of names like FedEx. "Play defense." As for Chevron, Cramer says he likes the oils but has been pruning larger ones in favor of small- and medium-sized gas companies. So he would sell Chevron and, for that matter, Unocal too. In terms of individual stocks, during the lightning round, Cramer says he is "dubious about the short-term prospects of Hewlett Packard ( HPQ - Get Report). But he would buy computer animation giant Pixar ( PIXR) because sooner or later it will strike that elusive deal with Robert Iger and Disney ( DIS).
On business software player Tibco ( TIBX), Cramer says he would not be too quick to sell the company's stock, despite its recent rough news, on account of Tibco's "unbelievable balance" sheet. Cramer describes the tech company as "a dollar-down-and-three-up proposition, that's probably worth playing." With regard to Guidant ( GDT), another company that's been in the news for the wrong reasons lately, Cramer told a caller not to buy it as an entry into Johnson & Johnson ( JNJ - Get Report). Instead, Cramer says to just buy J&J shares directly since they have come down nicely and sport a nice dividend yield. He also told callers to "ring the register" on Legg Mason ( LM - Get Report) after it announced its deal with Citigroup ( C) to swap its brokerage operations for Citi's asset management side. And on a day when high oil prices helped sink the market Cramer says he would continue buying UnitedHelath Group ( UNH - Get Report) and Halliburton ( HAL - Get Report), a pair of companies that "do well when things are bad and oil is on the rise."