This past week brought out some interesting commentary from our four bloggers on RealMoney. Once again, we'd like to share the "Best of the Blogs" with TheStreet.com readers. These posts best captured the intent of these blogs, which is to provide intelligent discussion on the issues each writer sees as most pressing that day.

This week, take a look at Jim Cramer on industrials, Rev Shark on a trade on the rotation from the Diamonds to the QQQQs, Steve Smith on exchange competition; and Tony Crescenzi on the implications of copper¿s breakout.

Click here for information on RealMoney.com where you can see all the blogs -- and readers' comments -- in real time.

Cramer's Blog: Industrials Have Room to Run

Originally published 03/16/2006 10:30 AM

People seem so mystified by the way the Internet stocks and much of tech are trading. Oh, let's call it as we see it: They are lagging.

But it's not hard to see it as a supermarket issue. The stocks that are truly on sale, the ones that are selling well below their growth rates, are the industrials.

These industrial stocks have become the coiled springs, the ones with the best year-over-year growth stories. The reasons for that, while multitudinous, can be boiled down to two rubrics:

1. U.S. growth as a driver is unimportant vs. BRIC -- Brazil, Russia, India and China. That matters, because while the Fed is tightening, many of these other export markets are in very strong shape. What does that do? It makes the playbook all money managers go by somewhat irrelevant. These managers were drawn to the complex of Yahoo! ( YHOO) and Google ( GOOG) because it was supposed to provide growth at an unreasonable price (remember, reasonable means nothing to the marginal buyers; they find no price for growth prohibitive) at a time when the Fed was supposed to be choking off growth. Same, by the way, for the HMO/biotech cohort, which is also sucking wind. Now the world of Illinois Tool Works ( ITW), PPG ( PPG), Caterpillar ( CAT) and Boeing ( BA) is much better.

2. Raw costs, which ballooned last year and were unsustainably high because of natural gas, now have come down so hard that the companies that were hostage to those prices are no longer captive. That's a godsend and a windfall for many of the companies I follow, and it isn't in the numbers until the companies tell us so. How long will this rotation last? I believe it will last until the valuations of the high-growth companies come much closer to convergence with the spurting cyclicals. That means there's a lot of time and a lot more upside, because the gulf between the two is huge!

At the time of publication, Cramer was long YHOO, PPG and BA.


Rev Shark¿s Blog: Consider Rotating From Diamonds to QQQQs

03/17/2006 12:55 PM

For those of you who have a market-timing inclination, I believe now is a good time to consider a bet on a rotation out of the Dow and into big-cap technology. You can capture this with a paired trade that is short the Diamonds ( DIA) and long the Nasdaq 100 Trust ( QQQQ).

The DIA has very good recent relative strength, but it is now quite extended and looks ready to at least base, if not pull back. On the other hand, we have the QQQQ looking pretty darned washed out after the pounding the chips took recently. Many folks are hating tech right now and getting excited about boring industrials and cyclicals. With the disparity of the group becoming increasingly extreme, the paired trade is a good way to profit if the relative strength gap closes.

You might also consider a short of the iShares Russell 2000 ( IWM)(IWM:Amex), which is the proxy for the Russell 2000, instead of the DIA short. I think either has a good chance of working against the QQQQ. Big-cap tech has gotten little respect lately, and the conditions for a change in sentiment are growing.

At the time of publication, De Porre was short IWM.


Steve Smith's Blog: Exchange Competition

Originally published 03/16/2006 10:39 AM

The competition among exchanges is being waged on all fronts; the big-picture battle of who can have the best IPO and largest market capitalization and win the near-panic race to merge and acquire is now spilling down to hand-to-hand combat of competing products.

The Chicago Mercantile Exchange ( CME) announced it will launch end-of-month options on stock index futures where the expiration date falls on the last trading day of the month. Initially, this will include just the S&P 500 and CME E-mini S&P 500 index futures and will begin with the May contract. A CME release says, "This will allow us to continue to deliver on our growth strategy through new product offerings like end of-month options in order to increase trading in our equity index options on futures markets." While there may be some hedging and useful cross-trading, the this contract will clearly compete with the Chicago Board Options Exchange's weekly options on the SPX index, which launched last November.

The need to maintain growth will become an issue for all these exchanges as they come public. One of the CME's strengths has been that many of its products were exclusive. But as competition heats up and the platforms become flatter and increasingly connected, we are likely to see more overlap, which means lower margins as each battles for market share.


Tony Crescenzi's Blog: Copper Busts Out

03/17/2006 1:23 PM

Copper is now up 9.75 cents per pound, at $2.368 per pound (limit gain is 20 cents per pound). The 4.2% gain is the largest since the 7.16% gain that occurred on October 29, 2004, and the gain highlights a key risk for the Fed:

If it signals an end to rate hikes too early, it will unleash a market response that could boost inflation pressures.

Equities and Treasuries would rally, the dollar would weaken, credit spreads would tighten, and banks would likely loosen their lending standards. Some of these types of responses are already underway.

All of this would likely boost commodity prices and, more importantly, the demand for labor. This, at a time when the economy needs no new stimulus and the factors that recently raised the economy's resource utilization rate have not yet abated.

By signaling an end to hikes, especially ahead of an expected rate hike on March 28, the Fed would reverse progress it has achieved in its goal of stabilizing the economy enough that it could grow at a healthy pace absent any meaningful inflation pressures (the glidepath period of sustained growth). This is why I do not believe that Bernanke will signal an end to hikes on Monday.
George Moriarty is managing editor of RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback; click here to send him an email.