Every rate cut matters now. We are in that zone where money in can overwhelm existing stocks and move them up simply because there hasn't been a lot of new supply -- ex banking preferreds -- and the buybacks kick in.
Let's take the homebuilders. As crazy as it was, the homebuilders bought a huge amount of stock back, and the supply is unusually low. That means you get exaggerated moves as that money comes in from the sidelines.
Same with stocks like Whirlpool (NYSE: WHR) (Cramer's Take) or Black & Decker (NYSE: BDK) (Cramer's Take), where just a little bit of buying seems to move the stocks absurdly.
I think much of this is a function of money not getting a good return on the sidelines, and we see that the shrunken floats actually work.
There are tons of companies that have bought back stock in the last two years, and frankly, it didn't matter because money's been coming out of the stock market for years; the Fed's actions should be and are reversing that flow. (So many good things happen with low rates that the media never talks about.)
That's why I am inclined to buy any weakness we get today off a 50-basis-point cut, although I think the market could RIP on a down 50 if we are unchanged or down ahead of the meeting announcement. It is amazing, though, how lately we go right to the brink up 100 points, making things much tougher. As a betting person, I expect that the futures' burst upward will most likely preclude buying, so you do have to pick some things up on potential weakness this morning.
What would I buy? Financials, of course. Numbers go higher on a 50-basis-point cut.
And last, industrials.
Anything less than 50 basis points and I would STILL BUY THE SAME STOCKS. I would just be careful of the blast of futures that might knock them down at a frightening speed.
Random musings: Lehman Brothers' (NYSE: LEH) (Cramer's Take) dividend boost goes far toward showing that this firm is not a mortgage house despite such characterizations. ... Yahoo! (NASDAQ: YHOO) (Cramer's Take) is really amazing. I cannot believe the lack of ability to monetize. It is amazing. Plus, how did they get so much staff? How did they get such poor gross margins? Why don't they put themselves up for sale? Anyone could do better with their pageviews except themselves ...
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 had no positions in the stocks mentioned.