Monday, March 23, 2009
(Cont'd from above)...

Jim (cont'd):   

Look at it like this, the fed got things rolling with an offer of unlimited money to buy assets for all comers… and then Treasury comes up with a plan that allows private investors to buy together with the government… the FDIC offers financing too, ostensibly to take the assets off of their hands… Ben Bernanke and Barney Frank together pressure the financial accounting standard board to lighten up on mark to market accounting… the President offers calm and makes it clear that anyone who is interested in the program gets the Feds blessing again… things are looking Jeri rigged and more coordinated by the second.. you got the SEC saying that it is cracking down on the naked short selling that has been the bane of all of the financials… banning the bears.

How about the uptick rule… that would prevent endless rapid fire short selling… these could all be coming back… all of these efforts together support each other… and if it really is the case that the administration is making a coordinated stabilization to save the banks… then we have got a rally that 500 points is not enough yet… that is right, it may not be enough… there could be more… so now let’s break it down… let’s look at the ten of the largest components of today’s move… what caused the rally so to speak… the percentage gainers within the S&P… what were most responsible for the rally… remember, this market is being led by the troika of oil, tech and financials… we have said that for two straight weeks… these stocks were the generals today too… these are the sectors were the biggest gains came from and that is why this move has credibility… the idea that it is a short squeeze… forget that, it is not a short squeeze… the rally is too wide spread.

First, we have got Exxon Mobil (XOM)… this is a stock that has been held back by the perception that the rally in oil isn’t for real… a rally that seems to be saying that the world economy is healthier that you think… remember last week, we had a story, just last week, the New York Times said how low can oil go… well, it is $20 higher than they said it could… not thanks to a combination of the weakened dollar, less production, and lower gasoline prices, Exxon is telling us that the oil move is for real… we have been waiting for that confirmation… we got it today.

Then, there is JPMorgan (JPM*)… this is a stock that I own for my charitable trust, ActionAlertsPlus.com, it was up 24.7% today, I think JP Morgan is the single most important stock in the Dow… because we need a bank that is strong enough to be able to buy toxic assets and take advantage of the FDIC’s desire to sell failed banks… I believe that JP Morgan could be the key to the next 2000 points and the direction… and you know which way I am thinking… and today it is telling us that the government is doing what I have said it should do over and over… ring fence some successful banks and allow them to thrive… as well as ring fence some toxic assets which then frees up all the money that has been sitting on the side lines within the banks, 4 times more than they need… if the government’s plans are as coordinated as they seem… then I believe that this one, JP Morgan, could see many more points of upside and take the rest of the market with it.

Who else is leading this rally?…

How about Wells Fargo (WFC*)?... another stock that I own for my charitable trust… two weeks ago the talk of the town was that this bank was going to be nationalized… that it could fail… Wells Fargo is up 23.9% today… that does not look like a failure to me… it is telling us that we are nearing the bottom in real estate… something that also came across from the terrific existing home sales number today… as this is a terrific play on the turn in housing… plus it has assets that could be sold under the new plan if it wants to… you put the Fed’s moves together with the mortgage modification plan and Wells Fargo becomes a blue chip fortress once more… that does not mean that these stocks are returning to their old levels, okay… I don’t want… I am saying that the Great Depression 2, this is the rally that takes off the Great Depression 2.

The third banking leader was Bank of America (BAC), up a stellar 26%…

This is two weeks now in a row that we have recommended this stock and we have caught a double..  This stock, not Citigroup (C) is the number one lottery ticket on the turn on the economy… it has doubled in two weeks… starting shortly before we endorsed the stock in our Off the Charts segment… I think it could double again if you believe that housing is coming back.. it could also suffer the most if things don’t go our way… but with the coordinated efforts of all the federal agencies behind it… there is plenty of room for Bank of America to run… especially if we get the demonization of bankers, courtesy of AIG, off the front pages of every newspaper in the country… and I think the President on “60 Minutes” last night… I liked the piece.

What else helped us power higher today?…

Chevron Corp. (CVX*) was a big leader, it is another name that I own for ActionAlertsPlus.com, my charitable trust, I had some good ones today… this is the cheapest energy stock… you have got to go read the presentation that they gave two weeks ago, actually three weeks ago, this company is set to go higher.. it is set to capitalize on higher oil prices, thanks to all of its drilling that it has done over the last 4 years… this is another oil general that is not done going higher.

I have no opinion about General Electric (GE), the parent company of this network.. but there is no doubt that it was a huge contributor to today’s rally… undoing the losses that it saw Friday… the company doesn’t need financing… that was the take away of the so called deep dive on Thursday… and its stock seems to be singling that a world wide economy is not out of the question… that is how I am phrasing all of these… that the possibility of recovery isn’t out of the question… because there will be a lot of bears who will say that Jim is not rigorous… I am saying that the bear case exists, but the possibility of it going away also exists.

We had an AT&T (T) nice move… the stock doesn’t fit into the oil, tech and financial troika… but it certainly deserves to go higher, even as I prefer Verizon (VZ) because of FiOs… that is their cable division… what AT&T is telling us basically that a utility is saying don’t worry about inflation is going higher… because if inflation was about to explode, AT&T would not be rallying.

How about tech?…

We need tech, with Microsoft (MSFT) and IBM (IBM) leading the way… market can’t rally without help from tech… it is too important.. The Nasdaq is too important… when it comes to Microsoft, there are a myriad other plays that I prefer… but its move today is a great sign that tech is broadening… IBM had that great quarter… terrific weak dollar play… it has come a long, long way… it is still cheap, it has got momentum and it should have a terrific half if the greenback keeps getting cheaper.

Which leads me to the last leader, one that would normally make me feel uncomfortable about today’s big rally…

Procter & Gamble (PG*)…

Here is a stock that you should sell when the economy is turning around… it really should be going lower not higher if things are going better… so why does it have me petrified… first Proctor & Gamble is a weak dollar play… and second the companies brands have been killed as people trade down to cheaper stuff… a turn means that more people are willing to pay back up for this companies brands… and the dollar going down is so bullish.

Here is the bottom line…

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The Bottom Line!:     The rally is for real… you can tell by going granular… by looking at the different pieces… see when you see these… this is the rally… this is the fundament of the rally… the ten generals that made this move happen… again, I don’t want you to be pigs… I bought a ton of JPMorgan (JPM*) for my charitable trust, ActionAlertsPlus.com when it got hammered, what did I do today… I didn’t want to be a pig so I took some off… I feel that the whole country was piggish… and if we hadn’t been we would not have been hurt so badly… I don’t want you to be piggish either… but what we are seeing is exactly what I want to see… strength in oils, tech and the financials… with the market responding to what looks increasingly like a coordinated effort by the Federal government and all its branches to help the banks recover and the economy turn around.

The rally has real strength behind it - but consider buying wisely...  Exxon Mobile, JP Morgan, Wells Fargo, Chevron, General Electric, Bank of America, AT&T, Microsoft, IBM, and Proctor & Gamble… that is leadership, it is wide spread… it is why the markets rally is for real… and you should only be scaling out to not be a pig… any weakness, we are right back in with that money.

[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:    With the expected reinstatement of the SEC uptick rule in the near future, what effect will it have on our arch nemesis the SKF UltraShort Financials?

Jim:    Well, my friend Eric Oberg, who was a managing director retired after 17 years at Goldman Sachs, has written eloquently piece after piece after piece on RealMoney.com, which is part of TheStreet.com, where I am chairman… and he has said over and over again that it is very difficult to have the SKF, which is the nuclear weapon that was used by the shorts to knock down the financials… very difficult to have that, maybe it has to be repealed… maybe you have to get rid of the SKF… which would be a God send… don’t forget that the naked shorting, the government leaked the stories last week about how much naked shorting destroyed Lehman and Bare… believe me there are a lot of other financials, too many to mention, that were almost brought to their knees by naked shorting… naked shorting and the return of the uptick means that home games have a chance again… home gamers need confidence to put their money back in… I don’t blame them for being gun shy.

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Q:    You keep telling us that the Great Depression 2 is off the table because of what the Obama administration has done. But is the US economy struggling along for 15 years with no growth, like the Japan economy, off the table?

Jim:    Yes, it is off the table… and do you know why… we are a different country from Japan… we are a growth country… we are not a shrinking country… we are a country of tremendous innovation… we are not a country that is not a copy-cat country… I am sorry the Japanese have a lot of great technology, but really all it has done is improve on ours… most importantly, we are a dynamic consumer oriented country… I know a lot of people don’t like our spending… but you know what, I miss our spending… maybe a little more and we will be there.

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[verbatim recap]

[end of segment]

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