All signs point to stock rally
You can create negatives if you try hard enough, but I'll stick to what's in front of me.
By Jim Cramer, TheStreet
When you've done five years' worth of shows, you tend to think that nothing you could say will have any sort of impact beyond wearing a funny hat or singing a silly tune like, "You just can't slay the bull" to appropriate the end of "Hotel California."
But when you mention, "Don't worry, be happy," let's just say that the long knives are out, and last night for me was the night of the long knives.
People I regularly hear from and people I never hear from blasted me back to oblivion, questioning my every assumption, from the idea that the U.S. government will be pleasantly surprised with a reduced deficit -- and I am not even talking about pulling out of Afghanistan, something that I think is on the horizon because Karzai's not worth supporting -- to the notion of an exciting turn in California housing.
Some of the critics missed the true supposition of the piece: That the game has changed from wanting to reduce exposure when you don't like the market to taking endless action when you see something that occurs. Case in point, today I see a headline that says, "Heightened Anxiety," yield premium over German five-year bonds on Greek bonds, and I am thinking how many hedge funds are shorting Mykonos-related entities or Banco Santander (STD) because of the "that's next" philosophy.
What I am looking at is a turn in the REITs and the KBW Bank Index ($BKX) and a bottoming in gold and a rally in oil -- all of these are saying things are better -- and a possible revaluation of the Chinese currency, which would be fantastic. I am looking at how any bank offering would be snapped up like there is no tomorrow. I am looking at housing sales that are too big to ignore, or truck sales that are too big to ignore, or car sales that are too big to ignore.
In short, I am looking at evidence. JPMorgan (JPM) and Bank of America (BAC) are breaking out. 3M (MMM) and United Tech (UTX) are breaking out. The REITs are breaking out. Gold feels like it is about to break out. The trusts connected with oil -- BP Prudhoe Bay (BPT) and the like -- are about to break out. The utilities and the rails are flying. It's a stock jailbreak out of the bear's den.
(Matt Horween, my skeptical friend who does a lot of fretting for me, came up with most of that list, and I can't disagree with him on any of it.)
Sure, fretting's fine. But something has to happen that affects stock prices negatively for me to fret. A 10-year at less than 4% when I have dealt with 8% ain't one of them. A Ford (F) five-year at 7.125% (that's right for a company that was supposed to be bankrupt) ain't one of them. The staying power of Apple (AAPL) or Cree (CREE) or Hewlett-Packard (HPQ) or Intel (INTC) or Ciena (CIEN) or F5 (FFIV) or Akamai (AKAM) or so many other tech stocks isn't one of them.
More important, as usual, I am on the defensive about this winning posture. Let me use a sports analogy. I feel like I am Duke having to answer to losing to Butler.
But Butler lost. Not Duke.
Yes, fret. Yes, keep your eyes open for something that could knock down Nucor (NUE) or Medco (MHS). But don't sign on to a philosophy that says, "Hmmm, I just heard someone on TV say the auction when poorly, so I am shorting the S&P or I am buying puts on Goldman (GS) and Wells Fargo (WFC)."
It hasn't been a winning philosophy. Sure with oil down and Europe sluggish, maybe this is it, the big day, the big fulcrum day where I could be dead wrong. Just give me credit for not being dead wrong before where the worst thing I did was predict that the health care plan would hurt corporate earnings. It did, it will. It was worth fretting about. But the stocks are all higher that have done it, not lower, making it still one more fret that had no payoff.
Finally, one more way to look at it. I have to tell you that if I knew that these big companies were going to announce big charges for health care I would have been short them. That was wrong.
Isn't that telling on its own?
At the time of publication, Jim Cramer was long Apple, Intel, Goldman Sachs, JPMorgan and Bank of America.
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These companies won't soar like other plays in the sector, but they make for great income sources.
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