All my career, the sentiment indicators have worked. When you get anything near minus 10 on the oscillator, you have to be silly not to buy. When you get anything approximating 35% bulls on the Investors Intelligence survey, you have to buy.We have almost double that negative on the oscillator and half as many bulls as that pathetic number.
Sentiment has become meaningless. It is incredible.
If we are going into a severe recession, some of the selling makes sense, but not all of it. As we pull back to 8500 on the Dow, we will be looking at stocks that are yielding 6% to 7% that are solid and can't be shaken. We will be finding stocks at prices that we will look back and think it was impossible to believe.
And then there will be another cohort where we will buy and then watch them go down again, because business is so soft.
I want to reiterate that the stock market for now is just plain broken. You can't have Occidental Petroleum (NYSE: OXY) down 15% like it is nothing. The company should be losing money with that kind of decline. Remember when I said on Monday that you can't have ExxonMobil (NYSE:XOM) ) go up 10 because it can go down 10 just as easily?
Well, here we go.
The market is just plain irrational.
That said, it is time more than ever to pick those stocks that make no sense down here, keeping in mind that there is no way interest rates are headed up and people will need good yields.
Here's Kinder Morgan Partners (NYSE:KMP) again at 8%. Philip Morris (PM), the faster grower of the tobaccos, yielding 5%! Halliburton (NYSE: HAL) at 6 times earnings. McDonald's (NYSE: MCD) with a decent yield giving up everything it has made during this great period of earnings.
Yet in each of those cases I think there is more downside. More downside!
What else can I say? these stocks have nothing to do with housing, nothing to do with the Fed's plans or failures. And it doesn't matter.
Let the stocks come down. Pick and let come down. We are on target to touch base at 8400 again. You buy some here and then leave room for that price and then the 7900 level that we triggered on Friday. By then, so many of these stocks will have fabulous yields and values that it will simply be too difficult to pass them up.
At the time of publication, Cramer had no positions in the stocks mentioned.
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.
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Reader Comments (Page 1 of 1)
10-16-2008 @ 10:15AM
nick said...
Crammer when are you going to recommend that the CEO of GE needs to go your real good at calling for other CEO's heads?
10-16-2008 @ 10:36AM
cproemer said...
Mr. Cramer I am 57, I have never been in the stock market personally, pension fund, 401k, etc. Not, Nada, Zip. I could just never trust giving my money(little) to someone that I worked so hard for, to gamble with. I know a lot of folks have made lots of money in doing what I could not see doing. Some of those same folks are telling me they have lost thousands of dollars. I have to tell them they only lost what they have invested, they can't lose money they never had. It was a RISK/GAMBLE. You folks that have made money, with money, probably don't think I was NOT wise to have this outlook. I am just a simpleton.I think as far as the Stock Market goes and folks taking money out, THE LIGHT MAY HAVE COME ON. TRUST!!
10-16-2008 @ 10:37AM
VJTRAPP said...
I believe National Public Radio does a better job informing me of the global economy. Crammer reminds me of somebody saying the Titanic is not sinking when it really is.VJTrapp Milwaukee,Wisconsin USA
10-16-2008 @ 10:41AM
SpiderXray said...
I would argue that this market is finally acting RATIONAL and the false runup since 2003 was IRRATIONAL. Throw out the charts and indicators as they are all based on information from a fake economy that never should have gone to the heights that it did. The VIX is meaningless and so is Cramers oscillator - all formed by bogus inputs. It's almost entertaining to watch the chaos and confusion from "economists" now that this market is in a severe decline. I've never seen so many Wall Streeters so wrong about this market - ever.
10-16-2008 @ 10:47AM
beachpaul said...
Ten years ago, I visited the East Texas Oil Museum. The security guard that worked there told me about " erl' bid'nis" support companies that would be a good investment. I wrote them down on the brochure. Halliburton was one. It's stock was under $10. When it gets back to that it may be worth a look-see. It was all a dream,Jim, digits on a screen.
10-16-2008 @ 10:53AM
Tony said...
The Swiss just bailed out UBS and here we are sitting at 8396. These bailouts aren't a quick fix and the market knows that. This is a pretty bad time to invest but a great time to trade. If we can't hold Friday's close, I'll continue to short any rally via double inverse ETFs.
10-16-2008 @ 11:01AM
BBOB said...
THIS IS NO TIME FOR ANYONE THAT ISNT ALREADY RICH TO BE BUYING STOCKS EVEN IF THEY DO LOOK GOOD... THIS MARKET IS NOT GOING TO SETTLE DOWN UNTIL THE INDEXES REACH 1990 LEVELS..
10-16-2008 @ 11:03AM
getwau said...
These are truly amazing times we are going through. If we live long enough, one day we'll look back like the seniors do today when they talk about the Great Depression. (By the way, what was so "great" about it?)
You know, there is opportunity lurking all over out there. There are people making strategic moves and will make a fortune from this period. Everything is on sale: businesses, real estate, stocks, etc. It just comes down to having the liquidity to start taking advantage of the bargains.
We will shake our heads at the missed opportunities when we look back.
EVERYTHING WILL REBOUND!
CASH! Piles of cold hard cash is the best way to weather the current economic situation. I discovered one of the best books you'll ever find about finance, "How to Become Filthy Rich on Your Current Income" at www.how-to-become-rich.com. If people read books like this one we would not have the current situation we do. As many people see doom and gloom right now, I see opportunity.
10-16-2008 @ 12:09PM
beachpaul said...
Send me a dollar and I will tell you how I made a million dollars. I got a million idiots to send me a dollar!
10-16-2008 @ 12:17PM
BBOB said...
BEACHpaul all i have left is 59 cents
10-16-2008 @ 1:24PM
Jim said...
Lots of words Jim, but not much said.
10-16-2008 @ 1:27PM
nick said...
Crammer let's talk about these ass holes at AIG who went on this hunting trip. Tell your cronies at AIG they work for the FEDERAL GOVERNMENT now and this is a no no. When Obama gets in he is going to put REP MAXINE WATERS in charge of the SEC and she is going to nationalize all you suckers. The brothers and sisters will be taking your job and you will be in charge of the latrine duty at the WHITEHOUSE.
10-16-2008 @ 2:16PM
beachpaul said...
BBOb, invest it in a share of OXYcontin. It'll make sentimental Cramer less painful to listen too.
10-16-2008 @ 2:28PM
Geronimo said...
Don't worry the foundation is fine we just biult the house with cards, just lost the roof so hold on.Negative savings gov. guaranteeing cash should be your signs.
10-17-2008 @ 1:30AM
ynot said...
The only thing doing worse than the market is Cramers reputation.
11-25-2008 @ 9:48AM
joe said...
CRAMER IS FOR CRAMER and boy george OBAMA WILL TAKE CARE OF BOTH!