Today's important stories from TheStreet.com: Cramer's Advice for the Fed Might Surprise You, Top 10 Value Stocks With Increasing Dividends
You know you are in trouble when fans at the big game want to talk about the Federal Reserve's meeting. Well, then again, if you are an Eagles or Giants fan, that's pretty much all that's worth talking about.
The impact, though, is simply too outsized to be trusted. The setup is too hard. The decision is too un-gameable. I haven't liked this setup since we started rallying last week, and I liked it less when we moved up Monday morning.
We have been lucky, ever since the cut in the discount window rate, to live in a world where you might wake up and find that the Fed was taking action. The mystery has benefited every group in one way or another, from the homebuilders to the oil companies.
Enough people have been buying Exxon Mobil Corp. (NYSE: XOM) and Goldman Sachs (NYSE: GS) , or Barrick Gold (NYSE: ABX) and Procter & Gamble (NYSE: PG) to make the last few weeks a pretty good time.
We saw a bunch of techies -- Nokia (NYSE: NOK) , Cisco (NASDAQ: CSCO) , Hewlett-Packard (NYSE: HPQ) , Research In Motion (NASDAQ: RIMM) , Garmin (NASDAQ: GRMN) , Amazon (NASDAQ: AMZN) -- go to new highs off the idea that things are pretty good but, more important, that those out years deserve higher valuations because of the decline in long-term interest rates.
Same with biotech. Nothing new happened with Celgene (NASDAQ: CELG) to propel it other than rates going down. Medco Health Solutions (NYSE: MHS) had that run because of a slowdown, but Parker Hannifin (NYSE: PH) had that run because of an eventual speed-up.
Plus another whole group of stocks just rallied because they do a lot of business overseas, like a United Technologies (NYSE: UTX) or a Boeing (NYSE: BA) . Only retail- and mortgage-dependent banks, homes and insurers failed to rally, but they also failed to go down much. It seems like we took the "retest" off the table.
And now, today, we find out which camp's wrong. The Fed, not the data, has defined these camps. Stocks in the S&P 500 don't work when it's perceived that inflation has been fanned or with the economy hitting a wall.
Now we have so many people focusing on the Fed -- thanks, sports fans -- that there have to be people who will react and exacerbate the trend and do so rather quickly. Given that it is also an options expiration week, that exacerbation will be further exacerbated. The statements of Alan Greenspan, which you know I regarded as ridiculously irresponsible and are well-timed only if you are Penguin Group, exacerbated things further -- the wrong way, of course.
There's always a chance we could win on some lucky combination of statement and cut. To appropriate from the NFL: on any given Wednesday...
But these are possible point gains I am willing to miss. Could the Dow go up 150-180 points today on something that strikes some large buyer's fancy? Sure.
However, that's the price of a setup that just seems too stacked against the bulls for the moment.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Goldman Sachs and Hewlett-Packard.
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Reader Comments (Page 1 of 1)
9-18-2007 @ 11:10AM
Steve Shackelford said...
I agree. I think 'gaming' this market is suicide until the fed says his peace. When we know which way he will go the footing won't seem as slippery. Good luck to anyone playing in these streets today. - Steve http://www.goofygrouch.com
9-18-2007 @ 5:22PM
wildbill said...
Essentially I agree. As we now know the reaction was positive and greater than most would have supposed. Now the question is - is this sustainable and is it a panacea? From my point of view I find this hard to determine as the information that has appeared to date seems to contradict any empirical view. Anything that is reported seems to be of a neutral to rosy position. The government tells us that there is no inflation. Food and fuel have dropped. This is like telling the public that world has suddenly changed to flat. Job creation, good paying employment and family income are all on the rise. Productivity is up. Profits are up. We are at the pinnacle of a great economic cycle. CNN loves doing polls and they should do one on this.
9-18-2007 @ 9:56PM
Wayne said...
I couldn't read Cramer's comments, the type was too small.
9-18-2007 @ 10:09PM
FELIX SOTO said...
all the fed shenanigans did was postpone the execution for domani.manana,tomorrow,morgen.
9-19-2007 @ 2:53AM
john said...
Jim Cramer, the "Voice of Reason"? LOL Caution is always warranted.
9-19-2007 @ 7:38AM
daniel siaw dankwah said...
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DANIEL SIAW DANKWAH
9-19-2007 @ 9:26AM
MTfunds said...
They lowered the rate for the banks but have done nothing to help the consumer. It's just corporate welfare. The consumer is still stuck with overpriced housing and credit card debts so who will be buying to fund this supposed expansion? Expect chapter 13 and 7 bankruptcies to go up in the next few months. We'll see how the street feels about that data.
9-20-2007 @ 12:53AM
BURG said...
The stock market went up because the value of your dollars went down ....HELLO
The value of the dollar will begin to drop much faster from here - Preserve your savings, save the value of your dollar - BUY GOLD NOW !!!! AND DO IT FAST.