JJC:     Do you know what is the driving force behind most trading on a day-to-day basis?

Do you know what controls short-term performance of the stock market of pretty much everything?...   You do, if you read Jim Cramer's Real Money: Sane Investing In An Insane World...  The most important short term force is what is called a sector rotation...  From bulls to bears... and vice-versa...  That's the subject for tonight's Game Plan for next week...
 
When I say rotation, I mean the big money managers, who pretty much use all the same play book, judge events the same way, and turn bearish on one group, and turn bullish on another, causing big moves down in what they're selling, and up in what they're buying, because these guys are dealing with huge sums of money. They're gigantic, lumbering beasts... they're slow... When you get ahead of a rotation you could make a lot of money, because you're much more nimble than they are. You are able to buy the stocks they are rotating into before they have done their enormous purchasing, and you can sell the stocks before they're finished destroying stocks.
 
Remember though, you can also get hurt, as we have learned with the vicious rotation of industrial commodities (sell, sell, sell) - including ag and oil - and into tech, financials (buy buy buy) and retail (buy buy buy)...

Now, call me skeptical about this rotation.  I think that the big money guys now have the wrong idea. I really can't think of that much positive to say about the financials, other than they're not as bad as they were a couple of months ago...and Fidelity's Magellan fund owns them. Harry Lang, the manager there, is really smart and he has a lot of firepower. And he, by the way, defines sector rotation. Whatever he moves into, is going to move the group, and he's been buying financials... 

So if you invest in the financials, it's because you're feeling a little more comfortable, because maybe their bad loans are getting better. I can understand that a little bit.

Now, the strength in retail, no... that's all short term. It's the combination of $600 iPod in every pocket, chicken in every pot, stimulus rebate, and maybe some good weather.

I wouldn't own retail...  I'd only rent these stocks and sell them into the strength.  Actually, we got a lot of strength this week, I'd start selling them next week, because we got gasoline prices up...and you know, all week, we've been talking with the food companies...  Not a single one has said anything other than prices are moving higher.
 
So I'm not moving into retail... People are spending too much at the pump, and at the supermarket.

As for tech, I just threw that whole sector in the Sell Block yesterday except for Apple (AAPL)...

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I think this rotation isn't for real...

And that means, if I'm right, we're gonna get another rotation right back into the old groups,  and you saw some of that today... with the industrials and commodities... agriculture... some of that was because of Agrium (AGU)... and I think oil and gas will coming roaring back.  You saw some of that today, as the futures for oil went up... and I think the financials and retails will stall.

Let's not take any chances. Let's find out how I'm right or wrong. We need evidence...  we look at evidence... which right now means certain stocks that report next week...

On Monday, first clue... after the close... Cleveland-Cliffs Inc. (CLF)... they report.

This is the largest independent producer of iron which you need to make steel. It's been a take over candidate forever and has fabulous earnings and it's up 125% year over year... up 93%, since I recommended it in May of last year.

If CLF goes up after it reports, then the rotation could be over right then and there, and people could go right back to the smock stackers.

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We've also got Anadarko Petroleum (APC)...

Now, this stock got clipped badly yesterday, when Apache Corp. (APA) dropped 8 points on its so-called bad report. I went over that quarter, APA had a great quarter, but people immediately started saying eulogies for the year of natural gas...  I think those people are wrong.

I think natural gas still works, and I predict APC's numbers will be good and the money will rotate back into natural gas.

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Tuesday is a big litmus day...

Fannie Mae (FNM) and Cisco (CSCO) both report, and these are critical if we're going to keep the rotation from earlier in the week alive.  Remember, though, the last time CSCO reported, it killed the tech rally with its miserable guidance.

The CEO, Chamberlain, could kill the rotation into tech single-handedly, given that CSCO is one of biggest tech names out there.

FNM, another tighten in the financial sector, is the publicly-traded way to get out of the housing morass...  It's losing money and it needs capital. It is up ten points, or about 50%, since Baron's questioned its solvency two months ago... bad call...   FNM needs to have a smaller loss when it reports and do an equity financing to sustain the rotation in the financials.  So you look for that clue...
 

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And then, on Wednesday, we're going to hear from Transocean Inc. (RIG), long my favorite deep-water driller and the largest off shore driller in the world...

You will quite simply not get a rally in this group without a great number from RIG. In other words, if the money is still trying to slosh around, figuring out which way to go, RIG will tell you where it's going.

By that point on Wednesday, when RIG reports, you'll know whether the rotation this week was real or phony... you'll have the facts. This rotation from the industrials and commodities, into financial, retail and tech will either be proven right or wrong by these companies' reports when they get their earnings.