Wednesday, April 22, 2009
(Cont'd from above)...

Jim (cont'd):   

The market is a lot like real life… you can learn a lot about the stock market just by smelling its breadth… people usually look at where the Dow Jones Industrial Average or the Standard & Poor’s 500 close at the end of the day… to get a feel for the state of the market… but as much as we like to cling to those totems on Mad Money… I don’t think…. well, let’s just say that today’s late day sell off told the truth about the session… more about the stock market in general… I think the sector breadth, I think the number of stocks going up vs. down is a much better way to measure the markets soundness… and it was good today… when the breadth is good, like the beer amid, right here, then this tower and not the averages tell the real truth about the soundness, the taste of stocks… and today I am happy to tell you, despite what looks like a pretty negative performance by the Dow Jones Averages… down 82 points… the pyramid of Listerine and good breadth are winning out… with far more stocks up than down in the Standard & Poor’s 500... and twice as many stocks up than down in the Nasdaq… that makes me feel far more confident about the market… I say bye-bye garlic and onions… hello minty fresh breath.

Here is why I am feeling bullish… look I am feeling bullish not necessarily for the moment, obviously you do not want the market to be down for the last two days… but the reason that I am feeling bullish is that are, there is so much strength from so many different sectors… now those who have been watching the show regularly know that I have been talking about the trinity, the banks, the oils, tech… and they have been good… but the breadth has been pretty thin… just those groups are giving us leadership… that could be masking something else… that could be Listerine covering up garlic breath… but today it got a whole lot better… we had an amazing confluence of stocks from many different sectors… much more than just the three leaders that have been used to going higher… which indicates to me that the market, with the underlying economy also, are in much better health… if you only look at the averages… then you think today was pretty close to a nothing, negative day… but if you focus on the markets breadth… well… it looks a whole better… in fact, the market looked great… smelled like roses.

So what specifically was so fantastic… what did I see… what contributed to the great breadth… which stocks were responsible for the S&P looking bad but actually doing well… what were the ingredients of the delightful mouthwash.

First, we had the strength in the telcos… which have become a real bow wow of a group… AT&T a huge company that I think represents a terrific investment with a great and growing dividend… terrific accidentally high yielder… reported some sweet earnings and the stock went up nicely… Verizon joined the party with some upward momentum too.

Alright, how about GE… oops, I have to be careful, they will whip me… after all, it is the parent company of this network… and it is a stock that I own, so I am not really allowed to talk about it… but let’s say that I were allowed to mention, I say that GE which is a great proxy for the world economy, is doing quite well… was up nicely today… but I am not supposed to say it, so I won’t say a word… who says that I am an indiscreet loud mouth… I mean isn’t the conversation off the record, just between us… okay, forget about GE… how about Caterpillar, Ingersoll-Rand, Honeywell, real metal benders… they are not lying… they are flying.

And then there is Wells Fargo another big mover… here is bank that has pre-announced good earnings, not once but twice already… now usually when a company does that its earnings ultimately disappoint the street… as everyone says that the numbers could not beat the twice range bar… think limbo, think hurdle, for you track and field stars… not this time, Wells Fargo’s actual quarter was everything we could have hoped for… even though it had already upped the expectations twice… and by the way to all the bears and government hounds out there, the bank is lending like it is going out of style…. I do not want to hear anymore complaints that the banks are taking TARP money and doing nothing… these guys are on fire at Wells when it comes to making loans… go tell it to the stagecoach… this one is pulling out of the station.

Then get this, there is a bio-tech in the mouthwash… part of a group that has been out of favor for a while… a stock that we have been recommending endlessly… it is Gilead… these stocks have been to your portfolio like garlic to vampires… but today Gilead comes out with a monster good quarter, thanks to its amazing franchise of drugs that can combat aids, and its growing heart treatment business, and the market absolutely loves it.

Do you want a real shocker… this is one that I can’t believe that I would ever say anything good about on this show… ever… Ford Motor… yeah, Ford… the stock is up astonishing amount today, 12%… and now it rates an upgrade for Goldman Sachs… the company under the leadership of Detroit outsider Alan Mullaney, he is the man that turned around Boeing… is now making a comeback that would make Henry Ford proud… if not Lawrence Olivia in his best work playing a Ford like character in Cramer fave “The Betsy”… when was the last time that we saw this kind of strength from an automaker of all things… I think that it was back when the Model-T rolled off of the assembly line.

Finally, an Intel, Broadcom, Google… leading a nice run in tech… you can’t have a good rally without tech … and look what else is on board… Lowe’s, UPS… I mean this is really incredible… you can take a ride on Northfolk Southern… it said that earnings were bad but the stock went up anyway… this is what good breadth is like… think about it… telcos, industrials, the banks, an auto company, bio-tech, technology…. that is the kind of broader market breadth… lots of sectors working… I mean that is what we have been hoping to see for months… when was the last time that you heard of a bio-tech and an automaker going higher… we now have many groups going up… including ones that weren’t in the recent past… that is what makes this market last… it doesn’t show up in the averages because the regular food and drug stocks that dominate, they are not going up… but we do not need to freak about those… those stocks are the garlic and onions… they are simply what you would buy when you are going into a depression or going into Transylvania… and we are not going to the latter anytime soon… and we are coming out of the former.

Or think about it like this… in the old market, the miserable pre March 6th market… The Street would have taken its queu from the bad news at Morgan Stanley… instead we think of Morgan Stanley as an outlier… and we like the lending machine that is Wells Fargo… we would have looked at GM going down and said here comes bankruptcy… instead we look at Ford and say there goes a stone wall… we would have said that Intel reported a bad quarter and dismissed their bottom, call out of hand… but now the stock just keeps going higher… even though the averages are marking time to going lower… you can tell from the breadth that they underlying dynamic is as strong as it has been all year.

Here is the bottom line…

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The Bottom Line!:     Today, the market got the thing that it is looking for… good breadth… telcos, industrials, banks, bio-tech, autos, transports, retail, oil service… that is a shooting match… that is what makes me believe in this market… good breadth does not need Listerine… it is downright kissable. The market had halitosis, but today it smelled minty fresh with good “breadth” - I’m a believer

[verbatim recap]

[verbatim recap]

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