Making sense of the market's hard rotation

Enjoy the move into financial and tech stocks, but don't overstay your welcome.

By Jim Cramer Apr 7, 2011 9:26AM

jim cramerthestreetDid someone flick a switch? Sell industrials? Dump oils? Crush agriculture stocks, thanks to Monsanto (MON)? And buy the financials and the techs? Throw in a couple of health care companies?

 

Can I just say that this is one of the wackiest markets I have ever seen? Look, I get tech. Texas Instruments (TXN) tore the heart out of those who are betting against it. Oclaro's (OCLR) rally for some investors meant that the most punishing tech sell-off has to be over. Maybe someone actually does want to take a run at Finisar (FNSR).

 

Oh, and speaking of flicking a switch, we now are all happy with Cisco's (CSCO) John Chambers because he has realized what we all knew: The company's strategy was failing. The conviction the market has in this guy is amazing. They even took arch-rival Juniper Networks (JNPR) down on it!

 

I still respect the seasonality, the supply chain and the personal computer and potential tablet gluts as real issues. But the Texas Instruments-National Semiconductor (NSM) issue shows that these companies are loaded with cash and are doing something about it.

Don't want to fight the tape . . . for now. I am using Tim Collins' $35 level on the Semiconductor HOLDRs (SMH) as the tell, and a breakout to the upside now seems likely.

 

The banks? Wednesday I compared JPMorgan (JPM) CEO Jamie Dimon's outspokenness toward the ridiculous overstepping of an unseasoned and unsophisticated Congress into the real realms -- the harmless, working realms -- of the good investment banks, to Joseph Welch, who stood up to Joe McCarthy when that outrageous demagogue had turned on the U.S. Army, suggesting it was riddled with communists. It was that brave.

 

Just like Welch's speech, I think that Dimon's comments may signal the high-water mark in congressional intervention in the group. The earnings may still be a mess, but the endless beatings may at last be winding down. The group is cheap. Again, though, call me skeptical. There have been many bottom calls in the banks; I have made a few. They have not panned out. JPMorgan, though, as I profiled last week with the help of my colleague Matt Horween, has definitively broken out, and that's very meaningful.

 

The industrials? Breather. Monsanto, going all "under-promise" on us, drove down Deere (DE). Deere takes down Caterpillar (CAT), and away they go.

 

The oils? I smell something good in Libya, which is bad for the group.

 

Just as I am somewhat skeptical about banks and tech, I am not as skeptical about oils and industrials. Sure, they have had big runs, but I think we are in export heaven with the weaker dollar, and I think that China is nearly done with its tightening and that the Japanese reconstruction, delayed by Tokyo Electric Power's issues, is on the way.

So Wednesday's trading made some sense. The rotation, egged on by buying in high-powered ETFs in a very, very low-volume environment, was more like a week, and the averages didn't show the destruction, just the construction.

 

I say enjoy the rotation into the financials and techs while it lasts, but don't overstay your welcome.

 

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.

 

Follow Cramer's trades for his Charitable Trust.

 

At the time of publication, Cramer was long CAT, DE and JNPR.

 

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1Comment
avatar
Don't they understand anything the Market is going into meltdown. 
Why can't Geithner and Bernanke realize that the USA is going down fast and something needs to be done.
Bernanke and solve everything at the drop of a high speed printing press. 
Have Bernanke print $15 trillion dollars and pay off the national debt before it sinks the US economy. 

AFTER ALL THE US ECONOMY IS TOO BIG TO FAIL. If Bernanke could print $9 trillion to save the Wall Street bankers surely $15 trillion to save America would be the only patriotic thing to do. God Bless America and Bernanke's printing presses to the rescue. 

We could even have China make soft stuffed printing presses painted red,white and blue to sell to our children and grand children to celebrate Bernanke saving the America Dream.
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