Tuesday, 06/17/08
Posted 06/17/08,  08:47 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Tuesday, 06/17/08

  Dow Jones: 12,160   - 108
  NASDAQ:   2,457    - 17
  S&P 500:   1,350    -  9
 
 
 
 
 
Final Segment 1
 
 
Final Segment 1 Title: 'Ax And You Shall Receive'

.  .  .  .  .

Featured Stock(s): Research In Motion (RIMM)  

See RIMM's official website here.

See the Yahoo! Finance profile for RIMM here.
 
After this segment, you can see Jim's Sudden:Death picks here...


JJC:   How on earth did Research In Motion (RIMM) go up 7 points yesterday?... and pull the rest of the Nasdaq up, off of RIMM's pin action, in what otherwise looked like a pretty much down day...

Let me give you a little Wall Street inside baseball... because this is important... knowing how and why stocks move is vital knowledge for anyone who wants to be a good investor... and I'm about to let you in on the picture that you wouldn't know, unless you worked on a great hedge fund trading desk...

To understand the anatomy of this rally, you have to be familiar with a concept we have on the Street... It's called "the Ax"...

Who or what is "the Ax?"...

The Ax is the analyst covering the stock, who has the edge - thus the Ax - over all the other analysts... It's the guy who knows the name better, who has been right on the stock's direction. It's the guy who owns the stock. And a guy by the name of Rob Sanderson, at American Technology Research, is indeed the Ax in RIMM... And Rob Sanderson is the reason for the rally yesterday.

Over the past months, while other tech names have stumbled, Sanderson has been adamant about RIMM... calling RIMM a must-own stock and, so far, this guy has been completely and totally right, which is how you get to be the Ax...

The rest of the Street now bows to his wisdom... and how can you not?...

On a nasty day like today, RIMM hits a 52-week high... It did bounce off... it finished up a dollar and change... But, again, that's the Ax after-effect... the wake of the Ax...

So yesterday, when the Ax put out a note raising his 2009 earnings estimate for RIMM, from $4.25 to $4.60 a share, and raised his price target to $205, that turned heads. Sanderson went up to what's called "Street High"... that's another term you need to know... meaning his earnings-per-share estimate was substantially higher than everyone else's. When the Ax goes up to Street High, that creates a powerful chain reaction of other analysts, looking to see if their numbers are too low... Because he's the Ax, everyone else does take up their estimates, and you get kind of a fantastic virtuous circle up. He's got the edge, and knows the stock better than they do, and that indicates an upside surprise may be coming, and the rest of the Street may be underestimating the power of the underlying business of RIMM.

When the Ax comes out and says - like Sanderson did yesterday - that RIMM is the best way for mobile carriers to grow their average revenues per user... in other words, the best way for the phone companies to make money... and that's called their ARPU - the average revenue per user... because iPhones have been causing bandwidth issues at AT&T (T) and because the Blackberry is comparitively a better ARPU generator for mobile phone companies... people listen.

Sanderson, after talking to multiple money managers, indicated that RIMM is the best growth story in tech... I say hallelujah... and that expectations for August are too low. I say listen to Sanderson...

Sanderson expects upside guidance when RIMM reports in August. But he told us that investors who missed the earlier move are hoping for a pullback.

Too many people expect this one to go down, especially because of the new iPhone launch. The Ax is telling us, don't wait, it ain't going to happen.

When the Ax says he thinks RIMM's August guidance will be better than expected, because of strength at
Verizon (VZ*) - RIMM's channel - over AT&T (T)... or because of the acceleration of RIMM's business in Europe, where he expects the 9000 Series Blackberry to start to ramp in the August quarter... and because business with S could be kicking in... What that does is convince investors around that Street that this man, with such credibility, is telling them, listen, don't wait... Get off the sidelines... buy some RIMM.

Historically, raising numbers of a tech stock, above the consensus, by the Ax is a way to jump a stock higher. And Sanderson knows that, even in a bad market... but it is also a great reason to buy...

You put the Ax and the Street High together, and it's like a chemical fire... not a regular fire. The shorts cannot put it out, and it sends the stock higher. That's how RIMM was up $7 yesterday and $1.18 today.

Now, because RIMM is an umbrella name for tech... that means, when it goes up, it generally pulls the rest of the Nasdaq with it. That's what ignited the rally, and that's where the pin action kicked in... 

.  .  .  .  .

The Bottom Line!:      I'm giving Sanderson a standing ovation.  Now you know how the process works.  The "Ax"... the top analyst in a given name on the Street... the guy with a supposed edge... When he takes his target up to Street high... higher than everybody else... when he takes his earnings up to Street high... higher than everyone else... the other analysts are bound to follow, and there will generally be enormous buying... pulling up not just the stock in question, but often all the associated names and, in this case, the Nasdaq itself.  There you have it...  the anatomy of yesterday's tech rally.

 

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)


RIMM

142.16

143.15

Research In Motion (RIMM)  

 

 

 



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Final Segment 2
 
Final Segment 2 Title: 'Mad Mail'...

.  .  .  .  .

Featured Stock(s): See comments below...
 
After this segment, you can see Jim's Sudden:Death picks here...

.  .  .  .  .

 

   
 

Stock Snapshots - Includes all stocks mentioned above

 

 

Jim
Cramer's
rating on
this stock

STOCK
SYMBOL

Closing
price
that
day

Opening
price
next
day

Full Company Name/Comments
(see comments above for each)

MCD*

59.21

58.95

Mad Mail

McDonald's
(MCD*)

Q:  
  I was looking at the Beijing Olympics and I was thinking of a play on the games... apart from Focus Media (FMCN), which I have been hearing about on the show.  I was thinking about buying some MCD stock, but I heard the Chinese prefer noodle soups to fast food.  What's your take?

JJC:
     First of all, I'm not recommending any Chinese stocks, including FMCN, which missed the quarter.  No Chinese stocks at all.  I like that Gushan (GU) as a spec.  Why?  Because China's been a bad market, and I continue to think it will be.  The only one that I think has been a really good stock for us over there is Yum! Brands (YUM).  I do believe that YUM - which is Kentucky Fried Chicken - is going to continue to have a good year, in large part, because of China.

FMCN

28.90

29.35

Mad Mail

Focus Media (FMCN)

See MCD* comments above for:
FMCN


GU

11.94

11.99

Mad Mail

Gushan Environmental (GU)

See MCD* comments above for:
GU


YUM

37.39

37.23

Mad Mail

Yum! Brands (YUM)

See MCD* comments above for:
YUM


DVN

120.77

120.93

Mad Mail

Devon Energy (DVN)

Wildcatters for ocean drilling?

Q:  
  The vast majority of the world's oceans have not been explored deeply.  Much of the world's oil might be hidden somewhere in the depths of Davy Jones' Locker.  I know Transocean Inc. (RIG) is a good play on this idea, but since you've been focusing on wildcatters, where are the wildcatters that drill for oil in the ocean?

JJC:
     It's too expensive...  There are none.  It costs $700,000 a day to rent a Transocean rig... on a good day, no wildcatter can afford that.  The one that I will tell you that's doing the best is DVN... but that's now really a big company.  DVN's down in the Gulf of Mexico, drilling like it's gone out of style.

 

 

[ end of final segment ]

   
 

Go to the SUDDEN:DEATH SEGMENT from tonight's show here >>

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Definitions of key phrases used by Jim, known as "Cramerisms":

Definition:   'Pull the trigger' is Jim's phrase for making the decision at that point to trade - either to 'buy' or to 'sell' (although he usually uses the phrase for buying), as if to say you should feel comfortable enough to make the final decision without looking back...

Definition:   'Ring the Register' is Jim's phrase for selling a stock, and making it a final sale, that you should not look back on.  Put it behind you.

Definition:  'Let It Come In' indicates how you may wait for it to pull back, or have the stock price come down briefly, as your chance (after letting it come in) to buy the rest of your position (i.e., total number of shares you own in that stock).

Definition:  'backing it up' or 'doing a 'mon-back' is Jim's phrase for the metaphor of backing up a truck to load up on a stock by buying it.  'Mon-back is short for the imaginary worker saying, 'Come on back...' as the truck is backing up to receive its load... Notice that we use the little truck icon to indicate where Jim has mentioned this.  Translation for buying stocks:  This recommendation by Jim indicates that, after you do your own homework on the stock, you should feel comfortable loading up on it, as it is in a good position to be bought at this point.
  See more "Cramerisms" & other financial phrases here >>
   
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