Thursday, March 19, 2009
(Cont'd from above)...

Jim (cont'd):   

Now, I want you to go back in the wayback machine with Mr. Peabody... three months ago, okay... Now, if Fred Smith had said that... bottoming out... no more worse... You know what would have happened?... He would have been heckled out of the joint... I mean, I think it would have been a veritable laugh track...

But, today, despite the estimate cuts, despite the negative guidance, the only thing people heard was, "seen the worst"... I mean, it was unbelievable... I couldn't believe it...

This stock rallied!... This is the new attitude of this stock market!... It's what happens when you've been down so long, it all just starts looking up to you...

No matter how Fedex talked about volume... all anybody heard was that things aren't, or maybe can't, get worse...

Now, UBS, in an interesting piece of what's known as "flash research" which comes out instantaneously... tried to call this new posture, "purple haze"... meaning that the famous purple-painted company's business is murky... but the market's saying no to that Jimmy Hendrix analysis... Instead, it's going with the Jackie Wilson interpretation, as in "higher and higher"...

I say, "excuse me while I kiss (the sky) the stock Fedex"... After being cut in half, it's going higher.

Now, maybe this doesn't make sense to you... maybe you need a madman to help you figure things out...

How can we take Fedex at its word today, when we would have sent the stock much lower a month or two months ago?...

To make sense of this market, you need to understand the concept of leadership...

You see, stocks aren't just about facts and figures. There's this big subjective element that everybody knows... "the animal spirits," as John Maynard Keynes called it... that's just as important... and, at this moment, it's turning bears - of which we know are far more prevalent... It's turning these guys (bear sound) into these guys (bull sound)... So, everything's being put into a much more positive light...

Right now, this market's being led by "the unholy troika" of oil, which we know, now above $50... of tech, where we're seeing some upside surprises... and, get this, for banks... No, I can't press the bull (sound) for banks. I just can't...

But, all of which, like Fedex, going into today, were viewed as bottomless pits of destruction... These are the generals... And, when you have good generals, the market can stabilize, it can regroup and, most important, it can gain adherence... Buy, buy, buy...

Generals that don't waiver, and go up on bad news, beget foot soldiers... All aboard!... And, when you have three leaders, that means lots and lots of followers... From analysts and portfolio managers to you, home gamers...

Oil, tech, and banks... after being bent, spindled and mutilated, are now the most powerful forces in this market today... They're creating what's known as a "virtuous circle"... that we need in order to go higher. They're going higher as the stable growers, drugs and food, suddenly get clobbered. It happened again today...

Some would say that they are all going up, because they are all going up, because they all do better from a weakened dollar... and, boy, did we ever get one of those, because of the Fed's move yesterday. I say, ours is not to question why, ours is just to buy or die... buy, buy, buy... although a weak dollar would be a Godsend for the big exporting companies...

Think of each "down so long it looks up to me group" as, yes, as an umbrella ella... We may have been down today, but each of these leaders has an umbrella effect that lets other stocks go higher... And the three together turn into a trampoline, that protects this market from going back to Dow 6400... and changes sentiment so that, when a company like Fedex reports a lot of negatives, all we hear about is, "worst is over, worst is over... bottoming out, bottoming out"...

Take the oil umbrella...

How many stocks does that give cover to, to go higher?... So, when prices take off like they did today... If you stick around, I've got a super-high-yielding stock that's a pure play on crude... a long march higher...

There are more winners than just the big integrated oils... Cramer-faves, Chevron Corp. (CVX*), BP plc (BP*) and Occidental Petroleum Corp. (OXY)... Those are the leaders. How about some foot soldiers?... The oil service plays... Transocean Inc. (RIG)... up a quick $5, since we said to buy it on Tuesday... Schlumberger (SLB)... Halliburton Company (HAL)...

But that's not all... Solar plays - polaxxed by oil's decline - they can rally... First Solar (FSLR), up $7. It's amazing the followers that general oil can attract... Strength in crude means strength in the commodities... so, get this... we had stocks like Nucor (NUE), which now, amazingly, is higher, than when it offered that horrible guidance that blew up earlier this week... The stock's higher from when they said that stuff... That's FedEx (FDX) all over again...

Higher oil means higher copper... Freeport-McMoRan (FCX*), up huge again today... Now up $23 from its low...

Infrastructure stocks... heavily dependent on oil... now have had major moves... so did those two animals of machinery, Caterpillar Inc. (CAT) and Deere & Co. (DE*)...

Of course, gold rallied. We hope you bought some gold all the way down like we told you to, because now it's just up huge... The gold rally is much more a reflection of the plummeting dollar. Whatever. We'll take it, right. And the diversification that brought us to the yellow metal. Two thumbs up...

The tech army...

Oh man, that's something else... Great earnings from Oracle Corp. (ORCL), a four-star general... And it allows everything software to rally, including sworn Oracle enemy, Microsoft (MSFT)... as well as the Switzerland of the group, Salesforce.com (CRM)...

We got great guidance from Major General, Corning Inc. (GLW)... the company with products that go into fiber for telco companies and glass for computer and television screens... Think about how much we can extrapolate from that...

You can say there is strength in Dell Inc. (DELL)... you can say strength in Hewlett-Packard (HPQ*), not to mention in Best Buy (BBY), SanDisk Corp. (SNDK), Cisco (CSCO*), Altera Corp. (ALTR), Xilinx Inc. (XLNX)... Nokia (NOK) caught an upgrade... That's a sign that cell phone demand could be improving... A lot of umbrellas in there... Gadget stocks all go higher... Cell phone stocks, alright...

Alright, our third general... a full five-star leader in the mold of Eisenhower... or, perhaps, MacArthur, without wanting to nuke China... The financials...

These stocks fell back today on profit-taking and, if they keep falling, then I'm going to have to check out this general... It could be stripped down... You need banks to go up, because there's no recovery in the cards without it. We do need to see these stocks stabilize, but then again, they rocketed 50% higher in a week. Can't they afford to take a little nap?...

The financials are the most cyclical group of all. They really need a strong economy to work, and we do not want them demonized...

When the banks go higher, that means the economy is coming back to life... Same with the techs, same with the commodities...

The rally we have had in this group has created an umbrella that gave the entire market cover to go higher... and is a big part of the market's now more positive bias...

The shorts now know it is no longer a one-way game... them stealing money from you... and now the hedge funds are starting to change their balance, and go long... meaning they're buying, not knocking your stocks down...

I think the troika of oil, tech and banks mean that we will not see that Dow 6400 again anytime soon. These three generals protect us. They are leaders and they allow more stocks to play "follow the leader"... They have put an end to the tyranny of the bears and made us think that, once again, as they did in December, happier days could be here again...

That's why we believe Fedex when they say "we've seen the worst" and send it higher... despite the copious amount of negatives...

Here's the bottom line...

▼   ▼   ▼   ▼   ▼

The Bottom Line!:     You can see it. People feel like the worst has happened... and they will ultimately follow the leaders, tech, oil and the banks, higher... as these groups create a big, positive umbrella, not to mention a floor, and a trampoline, that makes us all feel better, and feel like buying, even as the market took a bit of a breather today.

[verbatim recap]

[end of segment]

Read Jim's next Segment here  

Read Jim's next Segment here