Europe woes boost overstretched stocks
Problems in Greece and Italy have sparked a chain reaction that is lifting health care but hammering large-cap companies with great earnings momentum.
"Leave us helpless, helpless, helpless." You have to think about that lyric from Neil Young from so many years ago, with this explosion of worry from Greece, Spain and now Italy -- as if we really thought it wouldn't get to Italy in the end.
The ineluctable chain reaction continues into the dollar and therefore oil. And therefore the stocks that need oil to be lower go down the hardest, in part because they have a lot of gains and in part because they are big in the S&P 500 ($INX).
Then, when cooler heads prevail, we see from a simple perusal of the charts that the money flows back into devices, biomedical stocks and of course anything having to do with health care. So a chain reaction having to do with a Greece default leads to further multiple expansions for Bard (BCR), Baxter (BAX) and Becton Dickinson (BDX).
The absurdity of it all is lost on no one, especially those who are playing it this way, courtesy of the hard and fast notion that there is always a bull market somewhere. And right now it is in health care, because it doesn't have any links at all to Europe and does not need a strong economy.
Perversely, the most oil-impacted stocks get hammered because they are perceived to be the most vulnerable to a weakness that has not yet been seen but has to happen. Doesn't it?
So the games go on. The biggest-cap stocks with the best earnings momentum get hammered, and the most overstretched valuation plays get justified as undervalued. And the idiotic revaluation continues.
At the time of publication, Cramer had no positions in the stocks mentioned.
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