9 stocks you may have bought too soon

Two days ago was the wrong time to jump into these high fliers.

By Jim Cramer Oct 9, 2013 10:57AM

Microphone on a lectern with a line graph © Image Source/PhotolibraryThey are cracking the squeezes. Always happens about this this time in the sell-off. You begin to see how everything highflying trades together and sells off together. That's why Yelp (YELP), LinkedIn (LNKD), Netflix (NFLX), Amazon (AMZN) and Google (GOOG) can be clobbered all at once. Notice how Celgene (CELG), Regeneron (REGN), Biogen Idec (BIIB) and Gilead (GILD) are also being hammered.

 

That's just the way it is. These were shorted and shorted and shorted, and the stocks just kept going higher. At last they have broken the fever and are experiencing one of their regular paroxysms of pain.

 

I am reading on Twitter @Jimcramer right now about how I am killing people in these stocks. Let me be very clear about this: If you bought these stocks on me, you should have made a ton of money, unless you bought them two days ago, when I was definitely telling you that I was raising cash and that if you are buying now you are buying too early.

 

That's OK, I know the truth: Very few people on Twitter read me here. Some, but not many, watch "Mad Money." Most just read Twitter!

 

Blaming me for recommending about the best investment ideas I have ever had is fine with me. Be my guest. The main thing you need to know, though, is that after three to four straight days of this pain, you tend to get a bottom. That's when the short-sellers smell blood and go after these stocks that have been such horrendous shorts. That's when the longs who aren't nimble finally blow out these stocks. That's when the Johnny-come-latelies take a loss. Now we're only on day two of the selloff, so the idea of coming in and being a hero here has not been a good idea. It is just too early to buy.

 

Second, when you do go in, recognize that these stocks are coiled springs, but get the most bang for the buck by using deep-in-the-money calls.

 

Third, recognize that these declines are always so violent that they shake out everyone who is experienced about the way the stock market works -- hence the anger that comes from the left field of Twitter.

 

Fourth, the analysts will not come out of their foxholes to defend these stocks until after they bounced. They will be of no help.

 

Finally, understand that there is probably nothing "wrong" at any of these companies. Nothing fundamentally has changed. But how we view stocks through the prism of the government shutdown and how we viewed them before are two different things. If we go into a hard recession -- which is what looks to be the betting line today -- then people will pull in their horns and try to shed their riskiest equities, these highfliers.

 

So accept what the market does. Recognize that it probably isn't over yet. You want to take gains -- or losses if you just bought them two days ago? Makes sense if you are worried about the next couple of days,. Otherwise, find your deep-in-the-money call contract out until next year, and get ready, in a day or two, to buy. 

 

Jim Cramer's headshot


Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.





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153Comments
Oct 9, 2013 1:43PM
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For the last few years I have been preaching about the constriction of our economy and the transfer of American wealth and importance in the world as per what I call the New World Order.  I know many of you still think I'm nutz but so be it.  I think we are looking at the wrong end of American superiority and respect in the world today.  We will probably never again see the days of milk and honey like we have.  So many of us became complacent and allowed the electerds to dismantle a fair system that worked for many to an unfair system that benefits the few.  And there are still many who have failed to see the change on the horizon and still are programmed to the old ways. The first lesson is debt is an enemy that should always be feared. The second is politics will never replace hard work and saving no matter how convincing their agrument.  We will never completely cover over the scars we are creating by the events in our economy today.  That was then this is now!
Oct 9, 2013 2:01PM
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I really think the Republicans should suggest full participation in the ACA. Get rid of the exemptions include all the politicians. This way they contribute and really the stinking law has a better chance of making a difference with the opt'ed out people back in.... JMHO ..and if the politicans have to be in it maybe they will fix it.
Oct 9, 2013 11:06AM
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Very few people on Twitter read Cramer here?  I'd bet the inverse is true too - of the folks that read Cramer here, very few of them follow him on Twitter, or anyone else for that matter.

Oct 9, 2013 12:44PM
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I wonder if the surfin food stamp boy signed up for ObummerCare out in Cali yet?
Oct 9, 2013 12:39PM
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I am seeing our guberment kind of like Faceplant.  So much in DC is counterintuitive now. So many things seem back a$$ward.  Like are these cats running the show actually Americans?
Oct 9, 2013 1:40PM
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Remember even Obama chanted about the folks going bankrupt because of health expenses and not having adaquate insurance. Surfin Food Stamp Boy types don't go bankrupt. The folks that are in danger of that for the most part still will be or forced into buying something they used to feel like they could not afford.

Oct 9, 2013 11:48AM
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It didn't take long for Wall street traders to switch their manipulation from Yellin back to the debt ... it will be back to tapering next ... then ... the manipulation goes on and on and on ...

Oct 9, 2013 12:43PM
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Antropy
Whether or not you think Facebook is childish, is irrelevant.  Sites like FB and Twitter make millions per month in add revenue and additional per use content like games.  Now you can make the argument that they are way over valued and that's fine but people much younger then you use them by the millions and don't need your understanding or approval.  
Oct 9, 2013 12:42PM
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Twitter 12 billion market cap ....... brain farts from a collection of morons and those too stupid to be classified as morons (abs) ......

Never looked at a tweet in my life and likely never will !!!
Oct 9, 2013 12:37PM
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Faceplant has been bled for 10% in the last few days. I still don't trust the action on that issue.  It was the darling until it wasn't.  Market makers always seem to latch on to some stock and jack it and jack it and then make it go poof.  Funny thing is nobody is surprised or seems to care.
Oct 9, 2013 1:20PM
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Evil and Little Beav.......... I am for reduced and smarter spending by the military complex and I would support a change in the tax code. I think you will find many conservatives feel that way. Your arguments about us supporting those things but not the ACA holds little water.
Oct 9, 2013 11:22AM
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the REAL interesting article would be to read about how the algorithms are constructed that guide the computer trades. THAT explains the stock motions
Oct 9, 2013 1:31PM
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I guess the liberals are thinking ......... well something is better than the nothing the Republicans offered.... I really don't believe that. The way it was is better than what we have coming on. The people I knew that I thought deserved better when it came to health insurance don't seem to be getting much relief through this law. That is folks that make 40000 to 50000 a year and their company did not offer insurance. The policies they could get were either too expensive or had huge deductibles. I really don't see that changing. Tell me if I am wrong. The only ones making out are "Surfin Food Stamp Boy" types.
Oct 9, 2013 4:10PM
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I logged in as Limo Pat on the web site........... you would of thought I just entered the room at a family reunion.
Oct 9, 2013 12:18PM
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I think we should recognize we have now transitioned through the idea many had about business as usual. It is an unusual period because the usual is not in the forecast.  Amazing economic bombs go off to the left and the right and the Dow is hanging in there.  Everybody has been warned in my opinion so any losses after this point on on you.  Me thinks this is also the gist of Jims article.  I would also think those who want to short this market for a while are also already on board. 
Oct 9, 2013 3:59PM
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Pump and Dump ... as forecast    The manipulators excellled today ... Obama, Boehner, Reid, Bernanke ... all gave them soundbites to exploit. Volume took another hit.  The market is slowly dying ...
Oct 9, 2013 3:56PM
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Speaking of drug stocks Mr. Cramer,  what is the situation with the FDA and approval of generic drugs from India. Any investment opportunities there?
Oct 9, 2013 11:46AM
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Jimbo the revisionist seems to be stating that he told people to sell these "high flyers" a couple of days ago ....

I see nothing in your last few article - did you write in secret ink perhaps? Do we have to hold our computers up to a candle maybe?

Or maybe just maybe you are just lying your mule off !
Oct 9, 2013 3:10PM
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Penneys and Sears seem to be playing a leapfrog game to the bottom.  One takes a big hit and soon after the other. Some of us here suggest a contest for which one rolls over first.  Still can't for the life of me understand how these houses get away with buying either with investor funds.  I'm suspecting one will do a "favor" for another and buy out part of a position.  Couldn't imagine either ever being profitable again.
Oct 9, 2013 12:30PM
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WOW... the IMF says that a US Debt Default would "rattle" the world economy. WHAT economy? There is no economy. Yellin anticipates more pumping. Prior pumping has gone directly to the top 5% wage earners. That is a declaration of war and a call for world people to wipe out financiers everywhere. 
All the virtual losers Cramer lists above as getting hammered, none have reliable substance, so we are kidding ourselves supporting them. When you consider what an Amazon really is-- how much of the $632 TRILLION in derivatives has gone to puffing this Albatross and aiding it in collapsing REAL enterprise? Supporting trade-off banner ads isn't a profit venue. When I heard that ACA was strictly accessible online, I had to laugh...  Put the focking device DOWN and go find your life! 

I'm looking forward to a blow out. I want rich Republicans pulled out into the streets and beaten. I want dumbazz techno-addicts taken beyond the range of the GPS and left for predator pudding. Both are as useless to the rest of us as can be and a CANCER to our recovery. Free America NOW!!!
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