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[Ulisses Pereira]

"What's Working Now"

By Jim Cramer
RealMoney Columnist
3/22/2010 11:08 AM EDT

"We are seeing powerful bull markets trump the drag of Washington, and it is refreshing to see the money come in that has been waiting for the big, bad event to be over. We were soggy with a downward bias for no more than 20 minutes!



The pattern of "Wait for the event, pause the buying, let's see if the shorts take the market down and the sellers materialize, and if they don't, let's buy" is right back as if nothing happened other than a huge Fed meeting. That's bullish and will stay bullish given the push-off of the harm to the economy from the legislation. In fact, the only in-your-face headwind now that the most onerous taxation fears were not realized might be from companies that have more than 50 employees who need to let some go to get under the health insurance cutoff. Those will not be reflected in the employment numbers yet, though, and instead we will see the employment numbers spike from the hirings of census takers.

So, that's the go-ahead to start buying again. What are the buyers gravitating to, and what are they viewing as a source of funds because there is no new money coming in? Go back to the bull markets. The same bull markets as before, sans the pure industrials and the banks, in part because industrials like Caterpillar (CAT - commentary - Trade Now) squawked that numbers have to come down off the bill, and the banks because we need to see the legislation there -- they can't be bought until that big, bad event gets attacked and passed. I suspect that, in the end, the banks -- like the health care players -- will be perceived as winners because they have been kept down by fears that will not quickly be realized.

It is worth reviewing the top bull markets for a moment because of their transcendent nature. First, we are seeing nice buying in the Apple (AAPL - commentary - Trade Now) -led smartphone tsunami after the market took a break and stopped taking up the group as we waited and saw. Plus, we saw a lot of negative option activity that has now lifted. As we are now in sight of the iPad launch and we have no Washington news that can stop it, we can go back to buying the component players, which also may be reignited by a couple of hot tech IPOs. Think Broadcom (BRCM - commentary - Trade Now), Marvell (MRVL - commentary - Trade Now) and even lowly Qualcomm (QCOM - commentary - Trade Now). Don't forget TriQuint (TQNT - commentary - Trade Now), RF Micro (RFMD - commentary - Trade Now), Cypress Semi (CY - commentary - Trade Now) and Skyworks (SWKS - commentary - Trade Now).

The aerospace market is just on fire, with still one more convert to Boeing (BA - commentary - Trade Now), which then moves the whole complex. When Boeing announced that it was boosting production, that was a clarion call that the new bull market in aerospace is powerful and long-lasting and will not be constrained by the balance sheets of airlines. Please do not overlook Honeywell (HON - commentary - Trade Now) here.

The bull market in fast Internet is taking off once again which is a play on Cisco (CSCO - commentary - Trade Now) and Juniper (JNPR - commentary - Trade Now) and Ciena (CIEN - commentary - Trade Now) as well as JDS Uniphase (JDSU - commentary - Trade Now). That money's been on the sidelines for a couple of days. It is roaring back.

The tougher call will be autos. They have been strong and Ford (F - commentary - Trade Now) is not rallying ... yet. I think the group will get another tailwind from people who stopped buying the group because it was simply too hot. I like Johnson Controls (JCI - commentary - Trade Now) and Lear (LEA - commentary - Trade Now) there.




I also think that the generics and the expensive biotechs can keep ramping because the Democrats preserved their love of expensive drugs that are developed via tech -- that's always been Henry Waxman's pet project -- and the generics are so purely the winners that I believe they could have multi-day moves. Since everyone will be enrolled in plans, the drugs can keep moving up. Keep an eye on Abbott (ABT - commentary - Trade Now), as it has been the one that has been most savaged by this.

Against them, we will see money coming out of the robust mineral and oil plays simply because money has to come from somewhere in this zero-sum buying. And the Democrats will now spend a lot of time abusing some of the brokers and banks, so we need to see Citigroup (C - commentary - Trade Now) and JPMorgan (JPM - commentary - Trade Now) lead us out of that morass; they seem to be doing a pretty good job of it. I recognize, though, as we get the outline of the Dodd/Frank reform, it is not as onerous as we once thought, which will allow gun-jumping, as we see today. I think the group will be day to day, but the conversion of big bear Dick Bove on Citigroup is powering things nicely today. Nothing like a bear-to-bull to boost a group. Could Meredith Whitney be far behind?

The way this health care legislation ended up being packaged is just not damaging enough for the consumer yet. The tax regime that I most fear, the one that says you will lose a lot of the tax advantages that stocks have over bonds, was not ruined enough to make a difference.

Finally, because the taxes are so far in the future, the momentum stays in the retailers. So stay close to the discounters and the housewares. Best Buy (BBY - commentary - Trade Now) reports this week and I expect an upbeat statement, and we know that Williams-Sonoma (WSM - commentary - Trade Now) is a great umbrella for the buying in Costco (COST - commentary - Trade Now), Bed Bath and TJX (TJX - commentary - Trade Now).

Industrials not connected to aerospace, oils and gas connected with the futures and mineral companies connected to China remain in limbo, and I can't see why they need to be bought. Instead, people will buy the slowdown stocks, like the utilities. Notice the advance in Verizon (VZ - commentary - Trade Now) and AT&T (T - commentary - Trade Now). They are naturals to gravitate toward because the legislation is perceived as deflationary by the market. Otherwise gold would be up.

The shrewd nature of the final bill making the benefits available immediately and the payments not coming to 2011 will allow all systems go until we get closer to next year. Too far away now, which means it's just right for this market given its head of steam and the end of the quarter that is right around the corner.

At the time of publication, Cramer was long Apple, Abbott, Costco, Cisco, Honeywell, Johnson Controls, JPMorgan and Qualcomm. "

(in www.realmoney.com)