These stocks are in a game of chicken

But you can dance until the music stops, which will be in the second week of October.

By Jim Cramer Aug 26, 2014 1:16PM

Traders work on the floor of the New York Stock Exchange on Aug. 22, 2014, in New York City © Spencer Platt/Getty ImagesLet's face it. Someone is going to be wrong about the banks or the bonds. This curious decoupling we are seeing, whereby rates continue to go down but banks are breaking out, shouldn't be happening. At least history says it shouldn't. You have to be tempted to short these stocks and bet against the Financial Select Sector SPDR ETF (XLF) breakout if rates aren't going higher, because that means there is even more net interest margin compression ahead, and that's been the be-all and end-all for these stocks.

So what does it mean?

First, you could argue that the bonds are giving one last gasp up before a total breakdown. The interest-rate-sensitive stocks would go along with that. The real estate investment trust ETF, the iShares US Real Estate (IYR), looked like it was on the verge of a rollover most of the day. But I didn't get that read from many of the packaged goods stocks, the so-called bond yield equivalent plays. Some were up and some were down.

Jim Cramer headshotSecond, you might want to bet that bank stocks are no longer just hostages of net interest margins and people are now willing to bet on some growth for a change. The bank stocks with loan growth will be able to offset the drag of NIM.

That's possible, but I think unlikely.

Perhaps the worries over regulation are now behind them and the bad loans a thing of the past? I don't think the Bank of America (BAC) deal as coda to the end of the witch hunts holds up either.

To me this is a case where I think the stocks are just so far behind the market that as long as they don't report for ages and ages -- which they don't -- then you are going to see some lift. It's purely a game of chicken. You are buying them betting that you can get out ahead of when they report or you are really hoping for a turn in rates that I think will be unrequited.

I don't like this kind of game and am concerned that someone will make some cuts right now whacking the group. I feel the same way, by the way, about the big food and beverage plays with the strong dollar.

Right now, though, we are in a benign moment that is both highly unusual for these stocks and for the end of August where we have, historically, seen some pretty hideous selling.

So, no, I wouldn't bet the house against the group. It's too low. I just think this is one of those instances where the buying isn't constrained by any reports. We all know that when these stocks report they will disappoint, because the projections were made in an environment where 2.75 percent on the 10-year looked like a lock.

For now, it doesn't matter.

It might not matter for weeks if the analysts can stay on vacation. And the downgrades and number cuts might not happen until 52-week highs are taken out. But I am willing to bet that it's the stocks that are wrong, not the bonds, and you can dance until the music stops, which is in the second week of October, many moons from now.

Jim Cramer headshot

Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio for the stocks Cramer thinks could be winners. The portfolio
is long BAC.

More from TheStreet

Aug 26, 2014 2:49PM

V_L, please take your meds.  Whenever you skip your meds, you go a little bonkers.

Aug 26, 2014 2:57PM
Whenever I read V_L's rantings, I'm reminded by a great quote from George Orwell:  "What can you do against the lunatic who is more intelligent than yourself, who gives your arguments a fair hearing and then simply persists in his lunacy?"
Aug 26, 2014 1:24PM

"""you can dance until the music stops, which will be in the second week of October"""


Alrighty then!  we know when the crash is gonna happen! 

Aug 26, 2014 3:56PM
The end of October after how many moons ?
Aug 26, 2014 2:20PM
Bring on the pessimists!  Go ahead, tell us why the market is just about to crash... nevermind the new highs being reached in the markets on a daily basis.
Aug 26, 2014 4:32PM
There are always good reasons we advise caution....We ended up in the green which is great, take it any day but seriously, after a day like today 29 points and 2 in the S&P? Be serious, and if we would have had 20 more minutes of trading we would have ended in the red....Manipulators started doing their thing at 1130 hrs like we said earlier and from there it was all down hill....Again, we were fortunate to end up in the green....Scumbags are getting more peed off by the day, we have been up the last 3 weeks or so and they cant stand it....Be very careful tomorrow, these crooks are fit to be tied.
Aug 26, 2014 5:42PM

"Let's face it. Someone is going to be wrong about the banks or the bonds"

And would that be...Cramer??

Aug 26, 2014 4:39PM
The Real Game of Chicken Jimmy is how Big Banks across the Globe still have their Bogus assets market to FANTASY. That's one of the MAIN reasons the Central Banks have to keep printing over $10trillion in fake money and counting.
Aug 26, 2014 6:25PM
This dipstick is just hyping is own agenda, pharmacueticals and that new chicken stock LOCO. Banks are going to blow out next quarters numbers. Thats why they are moving now. WFC is done, peaked. JPM still caught up in scandals(the darling of wall street) what a joke. C is so undervalued you have to buy it. BAC yes the past has fianlly been buried so whats not to like about this MEGABANK? Absolutely nothing. Paid out 60 BILLION IN 4 yrs and still standing. Kramer put a cork in it your a blowhard!!!
Aug 26, 2014 4:41PM
Aug 26, 2014 2:34PM
What's it gonna be boy... stocks... or bonds? I gotta know right now... will you grub me forever? Got a pair-a-dice gamble on the Fed being right? Waiting til the end of time, 'cause that's how long you'll need to wait for liquidation value on either stocks or bonds.
They are full of KOOL AID.
We can't afford you investors. The world is waking up to that fact. Where do you run to once you've screwed the whole world? Not far, in the fat cat shape you're in. 
Aug 26, 2014 2:40PM
Hattie told Mattie, about the thing to do,
Invest in dead cat stocks now,
And inevitably lose...
Greedy grubbers... greedy grubbers...
Aug 26, 2014 2:41PM
Rocky mountain highhhh... Colorado,
They smoke weed there now... and their minds are dead...
Rock mountain high... Colorado,
Good reason to invest in toxic stocks at nosebleed pricesssssss.
Aug 26, 2014 2:39PM
This thing, called grub, it's all just fake, you know, crazy lil thing called grub-bing...
Game tokens...

Movin' to Montana soon... gonna be a phony money tycoon...
Somewhere over the cataclysmic failure, Kool Aid flows...
There's a lady who's sure, all that glitters is gold, and she's buying dead cat pumped up stocks,
When she gets there she knows, if the stores are all closed, QE will still flow 'cause it's fake you know.
And she's lying to us all about it not being game tokens... 
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