- the perils of shorting this market,
- trouble for the perma-bears, and
- good news that propels us higher.
You Want to Short Here? Good Luck
Posted at 8:44 a.m. EDT, April 6, 2009 What can be shorted here? Heaven knows things have run, but it's a tough game to short if only because of where we are in the cycle: Pretty much anything can be justified for owning here, whether it be the beaten-down drugs with their powerful yields, or the steels given their possibilities ahead -- even if somewhat muted by fact -- that stimulus will kick in. One could argue that we could see a repeal of the retail move given how far and how fast it has occurred. Consider, for example, Coach ( COH). Does anyone think that Coach is actually doing well? It's more than 50% off its low. But it has been cut in half from the high and it is a great company. The idea that it can recover and year over year do well is hardly fanciful. Nordstrom ( JWN) has tripled off the bottom and is up 46% for the year. But it is down 40% year over year, and the possibility of a Nieman Marcus bankruptcy could be as powerful for it as Circuit City has been for Best Buy ( BBY). And what about Best Buy, which has rallied far more than any other retailer? There, too, you have to be careful. New TVs because of digital changes and HD, and Circuit City's demise could really get BBY going despite its run. Sears ( SHLD) seems to have moved tremendously vs. how it might be doing. But it was forced down by naked shorts, and I think that despite all you hear about how poorly run it is, the company did better than expected last quarter ... and it's not as if the other companies are doing spectacularly. I would not short Home Depot ( HD) or Lowe's ( LOW), as they are classic refi plays, and if card check is off the table, Wal-Mart ( WMT) is an out-and-out buy.
Change Is Coming to Rock the Perma-Bears
Posted at 2:16 p.m. EDT, April 8, 2009Two things have not occurred yet, two things that will destroy the argument of the bears, the Roubinis of the world when they happen -- not if but when they happen. The bears will not be willing to recognize these changes when they happen. They will not be able to readjust.
This Market Just Loves Good News
Posted at 10:42 a.m. EDT, April 9, 2009 They let you in for a couple of days. They gave you a chance. But now, again, the chance is gone. Shallow pullbacks are signs of bull markets. Signs that things are better -- jobless claims, takeovers and now Wells Fargo ( WFC) -- are greeted with a level of optimism that shocks the bears and causes a total shift from ETFs that blast banks down to ETFs that blast banks up. So Bank of America ( BAC) becomes Wells Fargo because the two are about mortgage originations, and they now own the mortgage origination market because the government let them buy companies that looked terrible on paper but now may have upside, particularly when they don't flag the nonperformers. JPMorgan ( JPM) gets remembered as Washington Mutual, and that can ramp that stock, too. When you factor in that Nouriel "Never Wrong" Roubini -- good new name for him -- and Mike "Big Splash" Mayo had just urged people to short the names, you get a true conflagration that's going to burn all day. Meanwhile, it gets so hard to make money on the short side in the industrials because everyone's itching to upgrade them because they see the action. And the action is an Emerson ( EMR) that doesn't go down on horrid numbers and miserable guidance, or a Caterpillar ( CAT) that declares a dividend that no one counted on and can ignite buyers. Any good news = much higher prices. It's a simple equation. At the time of publication, Cramer was long Wells Fargo and JPMorgan.