The market is experiencing a nice rally today, and it should be enjoyed, Jim Cramer said on his
"RealMoney" radio show Wednesday. However, it's not because Ben Bernanke spoke, he said. Rather, the Standard & Poor's oscillator, a measure of whether the market is overbought or oversold, came in at minus four today -- that's the reason behind the rally. We are oversold, Cramer said. "When we get minus four on the S&P oscillator, we always get a snapback rally within a couple of days," he said. Sellers have become exhausted and have stopped selling. Although Bernanke did speak today, he said the same thing he always does -- that he's going to look at the data. It's not like he doesn't see what's been going on in the market, Cramer said, adding that people need to understand Bernanke did not trigger this rally, but that people don't want to sell when stocks have gone low enough. We have plenty of bad news right now, Cramer said. Before the market opened this morning, the consumer price index number that was awful, he said, adding that ADC Telecommunications ( ADCT) reported a massive shortfall and Yahoo! ( YHOO), which he owns for his charitable trust, Action Alerts PLUS, missed its quarter and is down hideously. The fact that we are oversold is what's driving the rally. We need to focus on what really drives the tape, and it's that we got too negative, he said. He advised people to sell a little bit of their gains on the way up. "When you're up huge, you take a little off," he said. "Remember we're going to get overbought again. Enjoy yourself, but don't be greedy."
Bernanke said inflation is the biggest risk in U.S. and the economy, and while it seems to moderating but it could flare up. Cramer said Bernanke's comments were neutral enough that people could embrace them if they are negative or positive. But one thing in particular that Cramer liked was Bernanke blaming inflation on energy. He liked this because it has the added advantage of being true, Cramer said. Bernanke is saying that inflation is beyond our control, Cramer said, adding that he was beginning to believe Bernanke thought he could tackle oil prices with rate increases. "Hallelujah!" Cramer exclaimed. "He gets it."
Cramer estimated Yahoo! could probably go down 10 points, but there are so many companies that want to buy Yahoo!, that he doesn't believe it will go that low. He estimated the company bottom to range between $15 and $25. After announcing a reduced earnings forecast and lower sales of copper and fiber connectivity, ADC Telecommunications said carrier consolidation and wireline/wireless convergence could create a strong potential for ADC to connect with customers' next-generation services.
However, consolidation could be devastating for ADC, Cramer said. Although he said he normally likes consolidation because it creates a more rational industry and less competition, it is not happening in the case of telco equipment stocks, he said.