Cramer knows what the bottom looks like and we are there. Only one time in his career have the market indicators that he uses failed him, and that was the crash on Oct. 19, 1987. This was a “reversal day.”
Today started out very ugly with Intel’s (INTC) numbers coming in low, the European markets down big, Cramer getting emails about doom and gloom from seasoned players, the housing sector getting hit by downgrades, and to top it all off it was the 18th anniversary of Black Monday. All this only meant for a great amount of buying since the market never does what it should.
A caller questioned if the bottom was really here, or just a rally. Cramer thinks that we will only really know in hindsight but he believes that something bigger is afoot.
What caused a rally Wednesday? Cramer said that it was a “function of the real buyers coming into the market.” “Pessimism had gotten too great.”
Reversal of Fortune
Lightning Round
Bullish:
Darden Restaurants (DRI), Yum! Brands (YUM), Grey Wolf (GW), Ameritrade Holding (AMTD), E*Trade Financial (ET), Charles Schwab (SCH), Panera Bread (PNRA), Countrywide Financial (CFC), Florida Rock Industries (FRK), Rinker Group (RIN), Vulcan Materials (VMC), Martin Marietta Materials (MLM), Public Service Enterprise Group (PEG), Nortel Networks (NT), General Maritime (GMR), Amgen (AMGN), Genzyme (GENZ), Genentech (DNA), Yahoo! (YHOO), Google (GOOG), VeriSign (VRSN), Texas Instruments (TXN), National Semiconductor (NSM), Aon (AOC), Occidental Petroleum (OXY), Cal Dive International (CDIS), Lufkin Industries (LUFK), Halliburton (HAL) and Skyworks Solutions (SWKS)
Bearish:
Wendy’s International (WEN), OMI (OMM), Momenta Pharmaceuticals (MNTA), Internet Initiative Japan (IIJI), Nvidia (NVDA), Silicon Image (SIMG), Hilb, Rogal & Hobbs (HRH), Texas Roadhouse (TXRH) and Sealed Air (SEE)
Radio Recap
Reports of the death of tech are greatly exaggerated. Cramer says he sees strong demand for “enterprise systems, Internet, cell phones, video games, big-screen TVs and Apple’s (AAPL) iPod.”
- Enterprise Technology : IBM (IBM) is going well enough that it could bou up $2, and Cramer feels that EMC (EMC) is doing even better.
- Internet : Yahoo (YHOO) had a picture-perfect quarter.
- laptop : Advanced Micro Devices (AMD) is taking some of the market share from Intel (INTC), but INTC isn’t as disappointing as some would think.
- Cell Phones : Motorola (MOT) is strong in a booming market.
- Video-game : Microsoft (MSFT) has the next xbox and the buzz is crazy around it according to Cramer.
- Big-screen TVs : Corning (GLW) and Texas Instruments (TXN) are ok, thought there should be some weakness in this market.
- AAPL has crazy demand. Cramer said, ” Try to find anything iPod anywhere.”
Internet stocks were talked about over the phone with James Altucher. Altucher believes that internet transactions will eventually get to 50%, they are currently at 2% to 3%. Currently 8% of advertising dollars are spent online. Cramer feels that advertising will double on the internet in the next 3 years. Altucher loves VeriSign (VRSN). Any dip in VRSN you should buy according to Altucher, Cramer agreed with him about the company.
The weekly segment “Am I Diversified?” :
- General Electric (GE) – Stock isn’t expensive.
- Exxon Mobil (XOM) – Cramer doesn’t see how anyone could get hurt buying XOM at these prices.
- Caterpillar (CAT) – Cramer would buy this stock.
- Google (GOOG) – YHOO’s good quarter only bode well for GOOG.
- Halliburton (HAL) – The company is going to split itself up and business is on fire.
- IBM – “Done going down.”
- Metso Oyj (MX) – Company is doing well.
- Fresh Del Monte Produce (FDP) – Cramer would buy Kellogg (K) as a food play.
- Energy Partners (EPL) – Cramer wishes he owned this stock here.
- First Marblehead (FMD) – Recent $22 price was crazy.
- eBay (EBAY) – Cramer loves the net.
- Pfizer (PFE) – Wyeth (WYE) and Schering-Plough (SGP) are the 2 companies that Cramer prefers.
- Occidental Petroleum (OXY) – Cramer likes it because everyone hates it.
- Lucent (LU) – The market doesn’t appreciate how well LU is doing.
- 401(k) holdings – Cramer likes the Vanguard Total Stock Market Index because it is more more diversified than the Vanguard 500 Index which he also likes.
Lightning Round
Bullish:
Penn National Gaming (PENN), Southwestern Energy (SWN), Cendant (CD), Google (GOOG), Bristol-Myers Squibb (BMY), American Electric Power (AEP), PNM Resources (PNM), Duke Energy (DUK), J.P. Morgan Chase (JPM), Wal-Mart Stores (WMT), General Maritime (GMR), Goldman Sachs (GS) and Altria (MO)
Bearish:
Halliburton (HAL), Sprint Nextel (S), Valero Energy (VLO), General Motors (GM), BioCryst Pharmaceuticals (BCRX), Panacos Pharmaceuticals (PANC), Progressive (PGR), Knightsbridge Tankers (VLCCF), Dobson Communications (DCEL), International Securities Exchange (ISE), Bancolombia (CIB) and Revlon (REV)
Stocks from Email
Google (GOOG) – If it hits $350 price target take your profits.
Dell (DELL) – Cramers sources say be cautious.
Intel (INTC) – earnings were not what we wanted, with a higher inventory number.
Texas Instruments (TXN) – The one to buy.
Apple (AAPL) – Hold until the video iPod has abundant availability then ring the register.
On TiVo’s (TIVO) partnership with Comcast (CMCSA), Cramer urged TIVO to be sold.
Microsoft (MSFT) – still a good play for a 4th quarter tech rally.
Outsourcing
ThermoGenesis (KOOL) hasn’t made money in 6 years and revenues “aren’t happening.”
IBM reported good results so Cramer pumped a company called Accenture (ACN). If IBM can do such good numbers in this market, ACN with its consulting business can do a whole lot better. Buying back stock, offering a dividend, beating earnings, and a Dutch tender offer are among the good things ACN has done, to no avail though at this point.
Up until last week Infosys Technologies (INFY) was the play for outsourcing, but Cramer found ACN. ACN has a cheaper stock and Cramer believes at 16 times earnings it is almost a value play. This is the best positioned company to make you the most money from the enormous secular growth that is coming in outsourcing.
Biotech Bonanza
Cramer still likes Genentech (DNA), which focuses on cancer drugs, and Amgen (AMGN), but he prefers Genzyme (GENZ) because he calls it a “beautiful mosaic” of a biotech stock. GENZ is diversified and goes after niche markets with little competition where they can dominate. Stay away from speculative biotech plays in this market.
Radio Recap
American Standard (ASD) poor performance is a bad sign for the economy. Cramer agreed with ASD CEO Fred Poses who said, ” the consumer is finally feeling pinched by higher interest rates and high gas prices.” The FED must stop raising rates and if they don’t Cramer will turn “incredibly bearish.”
Masco (MAS), Fortune Brands (FO), Lowe’s (LOW), Home Depot (HD), Toll Brothers (TOL) and Lennar (LEN) were all down in step with ASD.
Johnson & Johnson (JNJ), 3M (MMM), United Technologies (UTX), Merrill Lynch (MER), Wachovia (WB), and Genzyme (GENZ) reported good quarters but the Fed will kill the average stock if they continue to raise rates.
“Oil is in a precarious position,” Cramer says. Though he doesn’t know if today is the day it completely breaks down. Watch oil.
Cramer feels people r down on energy stocks which will curb demand for oil. BioCryst Pharmaceuticals (BCRX) should be sold and Cramer is no longer interested in the stock.
Amercrombie & Fitch (ANF) is a buy for Cramer and Prudential analyst Stacey Pak.
Petroleum Development (PETDE) is on Cramer’s shit list due to accounting issues.
BP Prudhoe Bay Royalty Trust (BPT) will not be affected like Fording Canadian Coal Trust (FDG) was by changes in Canadian tax laws.
National-Oilwell Varco (NOV) Cramer likes still.
Valero (VLO) is a sell.
Chesapeake Energy (CHK) doesn’t offer a good risk reward. At $31 now, with a mild winter it will go mid $20’s, a cold winter will move to $40.
Halliburton (HAL) is headed to $55.
Dresser-Rand Group (DRC) – wait til it goes to $20 to buy more.
Burlington Resources (BR) isn’t attractive from the winter risk/reward ratio.
Occidental Petroleum (OXY) – buy oil stocks that are down 20% or more from highs.
Cramer likes health care cost containment and defensive stocks – Amgen (AMGN) and Genzyme (GENZ)
Lighting Round
Cramers Recation To News
Of BioCryst Pharmaceuticals (BCRX). Cramer said it’s time to ring the register on this one.
Cramer believes there will be a stampede into IBM (IBM), which reported good earnings Monday evening. Cramer believes the stock will go to $90 by Friday.
Novellus Systems’ (NVLS) results were very disappointing Monday evening, said Cramer. Cramer made bearish comments on the stock and warned investors to stay away.
Cramer still believes Google (GOOG) will go to $350 even though he does not believe the stock will be added to the S&P 500 anytime soon.
Cramer said now that Cendant (CD) has completed the sale of its Trilegiant division, Cendant is now free to split itself up, which is why Cramer owns the stock.
