Stocks set for big gains

The charts say we're ready to roll with jobs growth and with a Congress that is no longer negative.

By Jim Cramer Apr 5, 2010 7:57AM
Jim Cramer

By Jim Cramer, TheStreet

 

Never, ever has it taken me this long to read the charts that come hand-delivered to my house every Saturday morning. And it is not just because I just came back from a whirlwind tour of Israel, Jordan and Egypt.


It's because when I go over the charts I am always looking for juicy ones, ones that tell a story, that signal where the action is, where the money's going to.

 

I dog-ear the pages and mark 'em like I am back in law school, no -- better than that cause I got a cushy job in year two so I didn't have to dog-ear much in the third year.

 

There are four charts to a page and I usually like to fold the page up or down depending on the corner. But I saw so many good ones that I resorted to ripping middle pages so I could come back to re-circle and figure out what the heck these patterns are saying.

 

And you know what? They are saying that now that health care is done, finished, complete, we are ready to roll with employment growth and with a Congress that is no longer pathetically locked into a negative mode. Does it mean that the rest of the negative agenda for business may be upon us?


I am developing strong views on this. If the likes of Verizon (VZ) and Deere (DE) and Caterpillar (CAT) are taking the hit and their stocks continue to power to new highs, maybe it just doesn't matter. Maybe the recovery is going to be so strong that we don't have to fret about Washington nearly as much as we thought.

 

Why?

 

The charts tell us the story. The folded and mutilated best-in-show charts include all sorts of groups that are totally discretionary in spending, a sure sign that something is happening with the consumer that is nothing short of miraculous.


Of course, retail is strong, particularly the once-scorned ghetto of teenage apparel: Gap (GPS), Abercrombie (ANF), Urban Outfitters (URBN) and Aeropostale (ARO).


That means parents are giving their kids money again. But so are the regular apparel places, like Jones Apparel (JNY) and VF Corp. (VFC), as well as the shoe biz, with Foot Locker (FL), Nike (NKE) and Dick's (DKS).


I can't include Finish Line (FINL) or Sketchers (SKX) because they aren't in the chart book but any perusal of those two tells you that people are spending like wildfire on things they don't need.

 

Speaking of wildfire, have you looked at the charts of RadioShack (RSH), Best Buy (BBY), Harmonic (HLIT), Sony (SNE) and Corning (GLW)? Tell me you would step into those places and buy a good entertainment system for your car or home if you weren't feeling better than the media says you do.

 

Or how about where people are shopping for expensive goods, ones that you buy when you are rosy in outlook: Tiffany (TIF), Whole Foods (WFMI) and Williams-Sonoma (WSM)? How else can you explain those new highs? I have no answer. I don't have one for expensive places like Coach (COH) and AnnTaylor (ANN), either.

 

Find a new broker and start trading

 

You would expect that if the pricey joints are rocking you won't see much spending at the poorhouse, but how can you explain the Family Dollar (FDO), Dollar General (DG) and Dollar Tree (DLTR) rallies? Fakeouts?

 

How about places you go when you aren't going to be kicked out of your house because of changes in the mortgage foreclosures being put in effect by the federal government, changes that at last look like they will work, especially if you judge the bull market in land as represented by Plum Creek (PCL) and Weyerhaeuser (WY), the two biggest landowners?

 

Going out? The charts of Brinker (EAT), Darden (DRI), Yum (YUM), Cheesecake Factory (CAKE) say you do.

 

Taking a vacation? Looks like people are packing their bags big time, with airlines like AMR (AMR) and Continental (CAL) and cruise lines like Royal Caribbean (RCL) and Carnival (CCL), or hotels like Marriot (MAR) and Starwood (HOT). Or destinations like Disney (DIS), and stops on the way like Cracker Barrel (CBRL).

 

If travel's back, the plane companies don't have enough planes to handle the new customers. Perhaps that, and the stubborn problems at Airbus, are driving one of the best bull markets out there, with Boeing (BA), Goodrich (GR), Ametek (AME), Rockwell Collins (COL), Allegheny Tech (ATI) and Honeywell (HON) all in a bull market conflagration.

 

They are one-for-one with the industrials that are hitting 52-week highs, the ones that should be dreading the Obama agenda: Eaton (ETN), SPX (SPW), Ingersoll-Rand (IR), Parker-Hannifin (PH), Caterpillar, Rockwell Automation (ROK), Emerson (EMR), United Tech (UTX), 3M (MMM), Cooper Industries (CBE), Dover (DOV) and W.W. Grainger (GWW).

 

Some of that has to do with autos, I am sure, as that category is demonstrating strength through the remaining players in the books: Johnson Controls (JCI), AutoZone (AZO), O'Reilly Automotive (ORLY), Magna (MGA) and CarMax (KMX).

 

You have to ship the parts, and the rallies in FedEx (FDX), CSX (CSX), United Parcel (UPS), Norfolk Southern (NSC) and Union Pacific (UNP) confirm it's happening.

 

The market has spoken about health care: the more customers, the merrier, which means anything with the word health in it, whether it be a REIT or a testing company as well as the HMOs, like Aetna (AET), and anything hospital or body part, like Stryker (SYK), can't seem to be kept down. Look out for pricey home care companies like Lincare (LNCR), because it looks like the government's going to back them in a big way.

 

Speaking of government backing, no sign of a letup in defense spending, so General Dynamics (GD), Northrop Grumman (NOC) and Lockheed Martin (LMT) continue their seemingly endless moves higher.

 

Few markets are as strong as the insurance companies that were supposed to be wrecked by their real-estate portfolios: MetLife (MET), Principal Financial (PFG), Lincoln (LNC), Genworth (GNW) and Hartford (HIG) are great examples.

 

So are the mortgage insurers, left once for dead, now powering mightily forward: MGIC (MTG) and Radian (RDN) being the best examples.

 

Back from the dead? How about dancing? The regional banks are joining the dance with BB&T (BBT), PNC (PNC), Fifth Third (FITB), Huntington (HBAN), Comerica (CMA), Capital One (COF) and Zions (ZION) among the strongest.

 

With taxes going up people seem to want annuities to protect themselves. How else to explain the sudden take-off of T. Rowe (TROW), Franklin Resources (BEN), Legg Mason (LM) and Janus (JNS).

 

Sure there are laggards, notably tech, save Apple (AAPL) and some fast Internet plays, like Akamai (AKAM), F5 (FFIV) and JDS Uniphase (JDSU). The semis are in the balance, the software makers stuck.

 

Incredibly, one of the worst groups is the oils and the oil services. They are poor performers, perhaps because of the leverage to natural gas. The drillers levered to it show that, as do the main users, the utilities, and the plastic companies: DuPont (DD), Dow (DOW), Eastman Chemical (EMN), PPG (PPG) and Olin (OLN).

 

Can you imagine if they caught fire? The only stocks left not to move would be the totally-out-of favor consumers staples like Procter (PG) and Kellogg (K) and Coke (KO), although Pepsi (PEP) inches higher.

 

Put simply, this is a remarkable run, embraced by about a half-dozen people I read and hear on TV. I know it's been hard to stay long. I got cold feet on the industrials believing that the health care plan would hurt them. That was plainly wrong. Worried about labor's powerful agenda and cap-and-trade, I got worried about the consequences of retailers like Wal-Mart (WMT) and banks like Bank of America (BAC), for unions, and the industrials for emissions.

 

Looks like all nonsense now.

 

Finally, we are coming in the least overbought we have been in a while. That means that most of these stocks still present an opportunity to buy.

 

Maybe some charts lie. Maybe some sectors are fibbing.

 

But to now acknowledge the power of this bull is to be, well, as I used to say in this column, WRONG.

 

Give this one its due. It ain't finished and it has a lot more converting to do, especially if 25% of the market, tech and oils, come to play.

 

Oh, and S&P, can you send me a new chartbook? Mine's too dog-eared now to use!

 

At the time of publication, Cramer was long Apple, Bank of America, Honeywell, Johnson Controls, Pepsi, Procter & Gamble, United Parcel Service and Weyerhauser.

 

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.

 

Related Articles

 

Crude oil futures near pivotal level

 

Blue-chip funds may gain this quarter

 

iPad sales? Depends on who you ask

 

5Comments
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
279
279 rated 2
454
454 rated 3
606
606 rated 4
675
675 rated 5
690
690 rated 6
622
622 rated 7
453
453 rated 8
301
301 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
BBBYBED BATH & BEYOND INC10
TWXTIME WARNER Inc10
COPCONOCOPHILLIPS9
HDHOME DEPOT Inc9
VZVERIZON COMMUNICATIONS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.