Friday, 06/13/08
Posted 06/15/08,  10:57 pm ET

(Scroll down to see Jim's comments below)

 
 
Today's date:  Friday, 06/13/08

  Dow Jones: 12,307  + 165
  NASDAQ:   2,454    + 50
  S&P 500:   1,360    + 13
 
 
 
 
 
First Segment
 
Opening Segment 1 Title: 'Cramer's Game Plan
  For Next Week'

.  .  .  .  .

Featured Stock(s): Wells Fargo (WFC)
JPMorgan
(JPM)
Lehman Brothers
(LEH)
Research In Motion
(RIMM)
Salesforce.com
(CRM)
Hewlett-Packard
(HPQ)
Google
(GOOG)
IBM
(IBM)
Ingersoll-Rand
(IR)
Emerson Electric
(EMR)
Eaton Corp.
(ETN)
Parker Hannifin
(PH)
L-3 Communications Holdings Inc.
(LLL)
Owens Corning
(OC)
Toll Brothers
(TOL)
Costco
(COST)
Wal-Mart
(WMT*)
Jones Apparel
(JNY)
VF Corp.
(VFC)



See Opening Segment 2, below...
 
After this segment, you can see Jim's Lightning Round picks here...

        
JJC:    Let's start with next week's game plan...

After a huge up day today, I think we have to address it head on. Now, one way to address it head on is to look at stock charts... Now, I don't believe in following the stock charts, okay... What's known in official Wall Street jibberish as "technical analysis".... I don't buy into most technical jargon, or subscribe to the idea that a stock - because it's gone through some line is about to go like that - or that a stock, because it's going through this line is about to go like that... I don't subscribe to the theory of the "head and shoulders," where, if the stock gets here, it starts going down...whatever.

I just you know...the charts?...  That's what they indicate stocks should do, okay?... Which is why, even though I have de-bunked this just now and threw out these three and a half years of Mad Money...it's funny that the Game Plan for next week is all about a tool of technical analysis...that's right...

We're going to use a tool of technical analysis to explain what happened today a little bit, but more important, how you can make money next week...and it's known as the Standard & Poors' proprietary oscillator.  I actually do subscribe to a service from the Standard & Poors, where I get charts hand-delivered to my door every weekend... simply because I actually like to look at the pictures... the pictures of how a stock's doing... in order to generate ideas for the show and for my charitable trust that I run...I'm constantly trying to generate ideas for that.

Now, I don't put much weight on the notion of the "head and shoulders," okay... that's the chart that's negative...or the "cup and handle," which is another one... This stuff might as well be astrology, entrails to me...okay, as far as I'm concerned. The idea that a stock is a sale because the charts are terrible... meaning that the direction of the stock has been down, so it'll stay down until it reaches what is called support...a level where it held before...no.

I think it's garbage...

I've always felt that stocks tracked companies...and if the company's fortunes are turning up or, if the stock of a good company has been taken down so low that it's cheap, I don't want to be talked out of buying it, because it looks like this, this, this, this, this...  No...no.  If a company is doing well on the stock...because that might be a damaged stock, but not damaged goods. But there is one part of technical analysis that I have followed religiously since 1987... and that's the aforementioned S&P Oscillator... [See the S&P link for this here>>].  The oscillator is a measure of how much selling or buying pressure there is in the market.  Again, I know that's a difficult concept...bear with me. When stocks are equilibrium...meaning they're probably not going to go up or down that much...the buying and selling...really roughly about the same at that moment, the oscillator is around zero, okay?

Alright here's the deal...

Most of the time, the oscillator's... there's no real edge of the line when its at zero, that's the axis... but, when there's buying for multiple days...you come in Monday, Tuesday, Wednesday, Thursday, Friday, and each day it goes up, because there's more buying than selling, that moves stocks up dramatically, the oscillator flashes and tells us that we are over bought...meaning stocks are out of equilibrium, and there's too much movement in that direction...

Over the last three years, when we hit +5... it's got an axis... When we hit +5 on the oscillator, that has always indicated that it's a good opportunity to ring the register... to take some money off the table.  And that has always been the case...I said in the last three years always...since 1986, with very minor exceptions, when we hit +5, you got a go, okay?  And I have found the indicator to be incredibly reliable, even though it is technical.

Now the same is true the other way... When there is selling multiple days and again, the axis is one to five...it actually goes down to ten, but five is what matters here...when there's selling for multiple days that moves stocks down dramatically, taking us to -5 on the oscillator, the opposite, the mirror image of +5... that's a flash of green... you simply have to close your eyes and buy, because we are so oversold...  You have to buy even if you think the world is coming to an end...  you have to buy even if everyone is saying, listen it's over, except it isn't over... And, while I know that past performance is not indicative of the future, I have to believe that the sun will come out on Monday, maybe even Tuesday.

Here's how the oscillator ties into our game plan for the week...

As of this morning, we hit -6.  That's even below... that's like the danger zone...  If you don't cover your shorts, and you don't start buying, you're going get hurt.  There's been no time in the last three years, not once, that we didn't have a huge rally after this oscillator had fallen to these levels.

Very simply, I believe that it's time to buy, buy, buy...

But buy what?...

For a trade into an oversold condition, which is what we're doing right now...I like to buy the most heavily beaten down sectors...stocks like Wells Fargo (WFC), on the banking side...where there is dramatic insider buying... Or JPMorgan (JPM), which has fallen a lot since it's done it's Bear Stearns (BSC) deal... or virtually any of the brokers still left standing... excluding Lehman Brothers (LEH), because I don't like to buy when a CFO heads out...as anyone who watches the show for a long time...even one as over matched as Aaron Cowling (?)... It was always "In Fuld We Trust"...Fuld being the CEO...  not "In Cowling We Trust"...until this year... Now, in LEH, it's no one we trust...alright?... But, what you saw today, just so you know...when we hit -6, that's why we hit the big rally today...it was technical...technically derived...  nothing good happened but we saw we were up 166 because we hit this level, alright.

Tech...I don't like tech...but I'll go with some new horsemen of tech...Research In Motion (RIMM), Salesforce.com (CRM), Hewlett-Packard (HPQ)... I like the merger... Google (GOOG) and IBM (IBM)... they are going to bounce off this.

How about "new tech?"... which I actually do like...

We saw the makings of a rally in that today. Ingersoll-Rand (IR), Emerson Electric (EMR), Eaton Corp. (ETN), Parker Hannifin (PH)... up two... I don't care. 

How about defense?.... They're all down because of fears that Obama will go Gandhi on us... Nothing could be further from the truth...I think Obama is on board...I think you have to buy defense stocks that have been hammered...particularly L-3 Communications Holdings Inc. (LLL)... because they do a lot of homeland security.

I'll even tell you to take a stab at, yes, hold your nose...  but remember that's what you do when you're down here in the oscillator...hold your nose and buy some homebuilders... or homebuilding-related entities... We had the CEO of Owens Corning (OC)...they do insulation... of course, also windmill composite blades...and how about this one?... Toll Brothers (TOL)...you know we like Bob Toll... If the stock's under $20, you gotta buy it.

How about retailers?... They work too... Costco (COST), Wal-Mart (WMT*), and the high-yielding Jones Apparel (JNY), which has made some good moves of late, and should soon be getting some fantastic business from WalMart. I think VF Corp. (VFC) works here too.

What not to buy as part of our oversold rally?...

Well, I've got to tell you...  You don't buy what's overbought when you're oversold.  And the oil and gas plays, which you know I like...are going to come in here...and that's your chance to buy them...  Don't buy them now... Wait until they get oversold, including the wildcatters and the majors.

The oscillator tells the tale best for beating up oversold stocks, and not the overbought... which will most likely be ignored in this rally.  I'm not backing away from the oil and gas plays...I'm just pointing out that next week may not be their week. You saw some of that today with a lot of them in a big up-160 day.

Why not buy them lower? Why does the oscillator work?... Because things are generally never as gloomy as people believe.  When the oscillator is oversold and everyone keeps selling...and it's never as great as people believe...because buyers got too enthusiastic or sellers too pessimistic... See, it's really a psychological depiction...This is greed... Everyone got too greedy up here, so it goes down... And this is fear... everyone gets too fearful here so it goes up and goes back to equilibrium, and that will be all I ever talked about technical analysis again.

.  .  .  .  .

The Bottom Line!:      When the oscillator signals either extreme, I think you have to make a move...and I believe the move is now to buy, buy, buy...the rally you saw today is the beginning of a multi-day rally...  You haven't missed a thing.

.  .  .  .  .

 

   
 

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)


WFC

26.08

na

Wells Fargo (WFC)



JPM

39.58

na

JPMorgan (JPM)



LEH

25.81

na

Lehman Brothers (LEH)



RIMM

132.96

na

Research In Motion (RIMM)



CRM

72.79

na

Salesforce.com (CRM)



HPQ

47.45

na

Hewlett-Packard (HPQ)



GOOG

571.51

na

Google (GOOG)



IBM

126.15

na

IBM (IBM)



IR

39.76

na

Ingersoll-Rand (IR)



EMR

55.92

na

Emerson Electric (EMR)



ETN

96.04

na

Eaton Corp. (ETN)



PH

78.67

na

Parker Hannifin (PH)



LLL

97.93

na

L-3 Communications Holdings Inc. (LLL)



OC

23.93

na

Owens Corning (OC)



TOL

19.91

na

Toll Brothers (TOL)

Price target to buy:  Under $20.00



COST

70.32

na

Costco (COST)



WMT*

59.18

na

Wal-Mart (WMT*)



JNY

15.33

na

Jones Apparel (JNY)



VFC

72.78

na

VF Corp. (VFC)


 

 



See all of tonight's stocks' latest quotes on Yahoo! Finance



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Second Segment
 
 
Opening Segment 2 Title: 'Ram Tough'

.  .  .  .  .

Featured Stock(s): RAM Energy Resources, Inc. (RAME)

See RAME's official website here.

See the Yahoo! Finance profile for RAME here.

 
After this segment, you can see Jim's Lightning Round picks here...


JJC:    This is it...  I'm going to miss this week.  This is the final day of "Wildcat Week" here on Mad Money...  a week devoted to the wildcatters... ... the companies that drill and search for new oil and natural gas in areas that have yet to be fully explored...

These wildcatters are the companies that are likely to find new oil and natural gas... If you're hoping for lower long-term crude prices, it's the wildcatters that will make them possible...

Our final wildcatter... It's RAM Energy Resources, Inc. (RAME).

.  .  .  .  .


This company is an independent oil and gas driller, focused on Texas, Louisiana, Oklahoma and West Virginia. It's got 39 million barrels of oil equivalents of crude reserves and it's already producing...but...just like this animal, it's a teeny tiny stock...So please, next week...no market orders...and only buy in small increments...this is one speculative wildcatter...as its about $5 share price gives it the mystique of the single digit stock.

.  .  .  .  .

RAME's production is 67% oil and its reserves are about 61%...giving it some natural gas exposure...which we definitely like...as, well, 2008 is Cramer's year of natural gas...Something I have said over and over and over again and will repeat endlessly, probably in 2009, because it's making us so much money. RAME Energy is in the Barnett and Devonian Shales...At Barnett in central Texas, it already has 15 producing wells, 29 future locations planned...RAME expects big increases in production with the increased Barnett shale drilling... and RAME will likely provide higher production guidance in a month or two that reflects its higher production expectations... that's going to send the stock up. This is the kind of growth that Wall Street can't get enough of. It's part of the reason why I think this stock goes higher. RAME is working with Cramer-fave, Devon Energy (DVN) and EOG Resources, Inc. (EOG) to develop this play... which could have around 100 Billion cubic feet of natural gas... there will be gas! Can't you smell it?...

.  .  .  .  .

RAME has also started drilling in part of the Devonian shale in West Virginia, in an area that's believed to have 450 Billion - 800 Billion cubic feet of potential natural gas. You got to love the shales, right? I may even like Tom Shales, even though he has never written a good word about us. The expectation is for RAME to drill 16 wells... wow, that's not bad...just this year. And if they strike gas that would be great news for the stock... that's what wildcatting is about...it will not always yield something... when it does, with these prices... it's RAME tough. There were 18.8 million things holding this one back... warrants at a $5 strike price... but they recently expired... with most being exercised. RAME used all proceeds to pay down debt. Without this warrant overhang... the overhang was like a chokehold on this... Well now it's free... the stock should move higher.

.  .  .  .  .

RAME is another orphan name... only four analysts are covering the stock... not one of them coming from a top-tier bulge-bracket firm... Now that it's been discovered by Cramer, I could see the stock... about a $5 going to $8... but if you don't use limits and you pay more than $5.25... you're going to pay $6.00 say... because you listened to me and I got too enthusiastic... well, I got to tell you, you're not going to make it. Do not get too enthusiastic... this is small-cap stock. The only thing that is happening today about the stock is that Cramer's talking about it. It's not making a big find today... it's not making a big find Monday... it's not making a big find Tuesday... If you buy it Monday with no discipline... you pay up a buck and a half on Tuesday, you're going to sit on a $5 stock... and you're going to hate me, okay... and I don't want you to hating me. I don't want you to jump all over this thing and move the thing higher with your buying... Take your time, wait for the good entry point... Buy in small increments... If you do that, RAM Energy Resources, Inc. (RAME) just might pay off.

Here's the bottom line...

.  .  .  .  .

The Bottom Line!:      To close out our Wildcat Week here, with our Mad Money Wildcat Index... Here they are again... Petrohawk Energy Corp. (HK), Rex Energy Corp. (REXX), BPZ Resources, Inc. (BZP), Range Resources Corp. (RRC), and finally... today's addition... RAM Energy (RAME).

.  .  .  .  .

 

   
 

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)


RAME

5.73

na

RAM Energy Resources, Inc. (RAME)

Price target:  $8.00

 

 

Go to the LIGHTNING ROUND from tonight's show here >>

See current quotes on Yahoo! Finance from tonight's show stocks here >>

Symbol keys:

A Charitable Trust stock. - An asterisk next to a stock symbol indicates that Jim mentioned it is a stock that he manages within
his charitable trust portfolio.  You can see the complete portfolio
of stocks here >>

Thumbs up - indicates he would buy the stock or, at the very least, not sell the stock.  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Thumbs down - indicates he has said not to buy or to sell the stock, based on his comments  We do our best to interpret Jim's opinion on stocks, as we think it is indicated by his comments during the show.  Please read his comments to decide for yourself.

Back up the truck - indicated by Jim, when he says the stock is so good, that he would do a 'mon-back' on the stock... In other words, this is the sound someone would say to a truck driver, "Come on back... " as he is "backing up the truck" to load up on his cargo.  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.

Stumped. - Of the 2,000+ stocks that Jim Cramer has in his head, for which he has an informed opinion, he sometimes comes across a caller with a stock he does not know well enough to opine on...  He then indicates he is stumped and will have to come back to it, after he does some homework of his own on the stock.  This usually occurs during the Lightning Round, when Jim does not know in advance who is calling, or what their stock question is about.
 

 
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 >>
   
Helpful Websites:
  See the stocks currently known to be in Jim Cramer's
Charitable Trust at:

jim-cramer-charitable-trust-stocks.com

 
See the stocks currently known to be in Warren Buffett's portfolio
of stocks at:

warren-buffett-portfolio.com

 
  Stock Homework 101:   This is an excellent upcoming site that provides resources and links to help you do that homework that Jim Cramer recommends after hearing his suggestions...

StockHomework101.com

This site is coming soon.   Thank you.

 
  FastMoneyRecap:   This site will be a quick summary of recommendations made by the great Fast Money TV show crew, that will offer you a unique service, to compare their picks to Jim Cramer's past comments about those stocks.

Fast Money Recap - Trades for next day...

Compare these picks to Jim's comments for the same stocks.

 

 

   
   
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