Wednesday, March 11, 2009
(Cont'd from above)...

Jim (cont'd):   

If the leaders hold onto their gains and advance on top of them… then we have real health… a real opportunity… maybe even a real tradable rally… that will have enough staying power for you the home gamer to make money… so what were the leaders yesterday…. tech, oil and the banks… tech, oil and the banks… when you have that unholy trinity kicking up their heals… you have got not one, not two, but three generals…. that’s lot of soldiers follow that… keep in mind… like the tire company says, sooner or later you will own the generals… we need to find out if these are Grant, Sherman, and Sheridan… of if instead we are being led by McClullen…. remember, Lincoln said that he has got the slows… looks good on paper, ultimately gets you nowhere… except for maybe the Peninsula.

First, tech… we had genuine follow through in this group…. genuine follow through…. huge, huge move… here is an average worth highlighting the NASDAQ which ran up almost 2% today… including some strength like the Philadelphia Semiconductor Index (SOXX)…. it roared again… maybe we didn’t lose the socks at the Wash-n-Dry after all, because these are looking beautiful… Apple, the true tech bellwether… shot up 4.57%… perhaps on the new cheap iPod… perhaps on the short covering… but just maybe because things just aren’t so terrible at Apple… how about Hewlett Packard, Cramer fave ActionAlertsPlus.com name… it was now up 3 points from where the stock was removed from Goldman Sach’s conviction buy list… I wonder if they have conviction now… too late… IBM is back to rallying, the only tech company to blow away the numbers… Amazon and Google got a little jiggy… with once more ramping 4.31% and 3.16% respectively… here is what I really got excited about… when Google dropped to under $300... people used it as a buying opportunity… a positive sign that investors are still willing to attempt to make money in this wild name…. let’s put tech in the success column… with the bears eating crow… or if you want to get granular, getting a sharp stick in the granular.

Alright, now oil…. no, oil was indeed today’s severe disappointment… we saw crude get shelled for more than $3.… it is now down a quick $5 from the high, too much inventory… although gasoline was down… which caused Exxon Mobil (XOM) to get crushed 2.4% decline… it ruined, unbelievably ruined Cramer fave Conoco’s positive analyst meeting… oil needs to be steady if we are going to mount anything significant here… because the oils are like a thermometer that takes the economy world wide temperature… the stronger oil, or any other commodity save gold, the more confident I am that we are not having Mr. Depression over for dinner… today we got the worst of all possible worlds… with gold getting some legs, up about a percent… and the oil complex getting just crushed… the exact opposite of what we want to see… it doesn’t mean that we don’t have any opportunities as Cramer fave El Dorado barely moved… seems right for a pick up after Agnico-Eagle Mines Ltd. (AEM), the other fave, marked up over 7%.

Finally, there are the banks… how many times have you ever heard me say do this (hallelujah)… within the sentence of the banks… this is a real tie breaker… it is the definitive one, and thankfully it signals more rally ahead… as I have said endlessly, banks are the key…. without them we are hopeless… today we heard JP Morgan say that too… like Citigroup and Wells Fargo before… that it is profitable… profitable for the first two months… man that is just something… do you know two is company, three is a crowd for the bulls… all three of these lurched higher… with JP Morgan up nearly $1... plus Goldman Sachs upgraded Morgan Stanley to its conviction buy list… JP Morgan, a stock that I own for my charitable trust, ActionAlertsPlus.com, is the most like Goldman Sachs… so I am adding Goldman Sachs to Cramer’s conviction buy list… and that second day rally on top of yesterday’s gigantic 11 point move for Goldman, is probably the single best sign of that we ain’t done yet.

What would make me feel more confident about tomorrow’s session… I would like to see some things of tremendous significance occurring again that have occurred before to see if tomorrow’s session is going to be good… just so it is clear, I am not talking about Jon Stewart mopping the cheap linoleum floor with my head tonight, because you see that happens every night… it is not much of an indicator… what to look for… I want to see some number bumps and upgrades of the financials based on the Citigroup, Wells Fargo, and JP Morgan upside surprises… we have got to get analysts on board… I would like to see upgrades of tech like we had from UBS this morning, with the Hewlett Packard… although it was an evaluation call… and I need to see some sign of reversal in this oil future trade… it has got to start going up… I mean how about a little juice ahead of the key OPEC meeting… don’t know that we have it… we got those recommendations we get the genuine follow up… we really get a genuine follow up… yesterday’s rally being added to with meaningful gains… that would be quite a different pattern from the five one day rallies of a similar 5% to 6% that we have had last… which truly were of in MacBeth fashion, full of sound and fury signifying nothing… as you lost everything that you made a week or two later.

Think about this if you sold at the close yesterday or took profit at today’s open… you are not better off… that is something new…. that is an important break with the pattern… for once it wasn’t worth fading the open… that is a hedge fund term for selling into a rally, because you know that it isn’t going to last… some more signs… it is important that the soft good stocks, the staples, which outperform during times of tremendous economic weakness go down… not too much… that would give people the sense that nothing is safe… but it is enough for us to feel that the economy is in a death spiral… but the most important groups are the three leaders from yesterday…. tech, oil and the banks… and two out of three ain’t bad.

Here is the bottom line…

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The Bottom Line!:     With the most important sector the banks getting still one more day of strength… and really adding to the gains of yesterday with more big gains… I am betting this rally is not over… and it is not too late to buy… any of the three leaders on any of the big pullbacks… like we had most of the day today… don’t get caught up in the notion of a bull market rally, or a bear market rally… if you make money the teller in the window doesn’t say… I am sorry, I can’t take this check you made it in a bear market rally, and we only bull market gains here… they say, here is your receipt, the money is in your account… that is what happens after every kind of rally… regardless of the genus, species, or phylum for that matter.

Two out of three ain’t bad & I think this rally could last, consider buying on pullbacks... The Dow is up… the Dow is up 4, but I …. I say turn to yesterday’s leaders… tech, oil, and the banks… I think that that is how we will know if there is staying power.

[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:    I had a prophetic dream that the market went up and that I was not in with my cash. I woke up and said what should I buy? Do I have the courage to buy?

Jim:    Well, you know what… I have to tell you… now yours was a dream, but what this really says to me is that there are many people who are worried about missing this rally… let’s talk about the complexion of today… and what I would tell you is intra-day we get these sell-offs… you could have bought JP Morgan for… you know, down today at one point… I want you to be patient… what I am urging you to do is be patient… it may not, may not be the right level.

Same Caller:    What I plan to do is buy on down days, so could you please help me speculate what sectors might have the maximum upside potential without risk of bankruptcy?

Jim:    Alright, so we need to go with cash flow… what companies have the most cash flow that you can buy… in other words what companies are protected by the dividends… and the two are the staples, which I think will come back into vogue… because I do not think this is an economic turn, I think that it is just a nice short term rally… and the oils, so when oil goes… if oil goes below $40... I want you to start picking at these oils… and all you have to do is think of which of the majors, the integrateds, not the little guys, the integrateds where you fill up at the pump that have greater than 4% yields… and that is what you are going to do… I put that in your head … hopefully you are going to have that dream, and then we know that it is going to come true.

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Q:    With the government interventions going for the infrastructure, would it be a good idea to invest in the building materials section for the short or the long term?

Jim:    No, no, you can’t… and I will tell you why you can’t… because there is not enough money going from the stimulus package into actual bricks and mortar build… there just isn’t… now, for instance, I feel very strongly that if you were to go buy one of the big… the Shaw Groups, the Flours… you are not going to make any money… and if you are going to go into Cemex, or if you are going to go into any of the companies that have Vulcan Materials… I think that those are too distressed and that you will not make a profit… I always like to play rallies… but that one is not going to get you there.

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Q:    I own NYX...  Do I hold?... Buy more?...

Jim:    Can I tell you something… because you know that NYX was one of the… I wore the post-it for the NYX… I was humbled by NYX… but fortunately I got out, pretty much where I recommended it… though I round tripped which we know is a sin, as I detail in CONFESSIONS OF A STREET ADDICT… round trip is the dumbest thing that you can do, and I did it… but I think that this explosive volume yesterday on the New York Stock Exchange… it was explosive… could be getting more volume… the stock, the yield is safe… I think that NYX is good for a trade… I don’t want to stick my neck anymore, because it seems to get chopped off every single night around 11:30.

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[verbatim recap]

[end of segment]

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