TheStreet.com's Jim Cramer says you can game the psychology of the market if you want, but know the rules. I see the plan: Every day that the market looks like it is going down we give $10 billion to some bank! It is sure-fire. Did you notice the momentary weakness in France Monday? Quick, cut checks to BNP, SocGen and Agricole. Why not? When ING (NYSE: ING) (Cramer's Take) looked like it was a disaster, giving $13 billion to that one-time conservative bank turned all of Europe around!
Monday, when there was a moment that we looked weak, when it looked like we were going to go from plus 200 to below 100, Treasury let it be known that there is a whole other round of checks coming for the second-tier players. Who knows? Boom. That plus higher oil prices turned the market around in the upside-down world we are now in! No doubt soon Downey (NYSE: DSL) (Cramer's Take) and BankUnited (NASDAQ: BKUNA) (Cramer's Take) might get checks and then everything will go higher.
Oh, and on top of that, we have a new stimulus plan, one specially designed, no doubt, to move Target (NYSE: TGT) (Cramer's Take) back to its moving average and get Macy's (NYSE: M) (Cramer's Take) off the critical list.
All of these things are "good." Lowering ECB rates would be ''good." Having more commercial paper would be "good."
They are all "good."
But the only substantive thing I saw Monday that I liked was Exelon's (NYSE: EXC) (Cramer's Take) move to take out a player that needed short-term financing, NRG (NYSE: NRG) (Cramer's Take), just like Buffett took out another player who needed short-term financing and struggled to get it, Constellation (NYSE: CEG) (Cramer's Take).
Why was that positive? Because our issues are not keeping as many companies afloat as possible, our issues are allowing the strongest companies to emerge that can make the most money. I think it is great that ING and BNP got bailed, but it does not inspire me to own them. I think it is terrific that we might have another stimulus, but it does not inspire me to buy retailers.
These are all about the same thing: making it so we don't have minus 4 GDP and big unemployment.
Here is what they do: They allow us to have a big oversold bounce that encompasses everything except the companies that report and if you let spin the story nicely enough, they can rally too.
Beyond that, though, and you have to understand that until we see more Exelons and better earnings, you are going to be strictly playing the psychology and the bounce, both of which are now extremely positive but both of which will go away as we head higher.
As long as you know those are the rules, play on!
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RELATED LINKS:
Stimulus Chatter Still Short on Details
Cramer: Exelon-NRG Deal Should Happen
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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.
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Reader Comments (Page 1 of 1)
10-21-2008 @ 10:25AM
beachpaul said...
You got it. It's just play now, dribble in, dribble out. The bailout brigade is bandaging whatever bleeds. The Feds soporific speeches soothing the pain. The market swaying to the lullaby. The elections spiraling softly to the ground. Somethings not right.
10-24-2008 @ 11:02AM
ColoGirl said...
The Country knew this was going to happen, In my opinion, they can give all they want too to the banks, but if people have no jobs, they cannot spend.. this new stimulus plan? will only help Americans pay the past due bills owed. I am glad to see Americans say We have had enough.