Tech, health care too hard to play

In an already confusing year, stocks in these sectors have become too random and inconsistent.

By Jim Cramer Jul 27, 2010 8:38AM

jim cramerBy Jim Cramer, TheStreet

 

Some segments of this market are too hard to work with. Last night I talked about how tech has become too hard. How could Cirrus Logic (CRUS) and Skyworks (SWKS) be the only two tech plays I follow that hit a 52-week high Monday? They are parts makers, for heaven's sake.


But suddenly they are viewed as total winners because they have parts in Apple (AAPL) products and Apple will need to start a price war to win against Verizon's (VZ) Droid! That was Monday's collective mindset.

 

The rest of tech was really not so hot -- led, inevitably, by Intel (INTC) and Cisco (CSCO), which do nothing on good and bad days. These are two disappointing stocks that I think are too cheap and doing too well to ignore, but they are ignored daily.

 

The other segment that's way too hard to play is health care. It bumps along doing nothing until, voila, we get a bid, and then everything runs, and then it goes back down again.

We now know that there are many companies circling around Genzyme (GENZ), because none of the big guys have any growth anyway. So what happens? Biogen (BIIB), Cephalon (CEPH) and Celgene (CELG) all ramp up huge as other potential takeover targets. Celgene? I mean, that's bigger than half the companies that are supposed to be buyers. I figure all three will go down again.

 

Or health care maintenance companies. People keep talking cheap. Cheap? See above about Intel. That's no catalyst.


I am not saying that tech or health care has become like the banks, which we’ve all begun to recognize are completely and utterly uninvestible. Monday was a rare good day on account of better housing numbers and the lack of equity issuance out of Europe.


But if jobless claims are bad on Thursday, you know Bank of America (BAC) will go back to the low $13s, JPMorgan Chase (JPM) will retreat to $28 and Wells Fargo (WFC) could head back to $26.

 

But health care and tech have become too random for most people's portfolios, which leads to underperformance, which leads to double ETF selling pressure, which leads to more underperformance until the sector is so beaten down that it gets interesting again. Certainly, though, not in any time frame that allows you to keep up with the averages.

Of course, that means a dramatic overweighting in the radically overbought industrials. But without that overweighting, the notion of being in the black this year is downright fanciful.

 

It’s a tough, confusing year, unless you own the United Technologies (UTX), Union Pacific (UNP), UPS (UPS) quadrant.

 

Then it's all gravy.

 

At the time of publication, Cramer was long Apple, Intel, Cisco, Bank of America, JPMorgan Chase and UPS.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

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