Making sense of the market's hard rotation
Enjoy the move into financial and tech stocks, but don't overstay your welcome.
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 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.
Follow Cramer's trades for his Charitable Trust.
At the time of publication, Cramer was long CAT, DE and JNPR.
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