Cramer: "No Crash Yesterday, But Was It a Bottom?"
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"Seven Reasons to Be Positive Here"
By Jim Cramer
RealMoney.com Columnist
3/18/2008 10:56 AM EDT
"Here we go again. The bottom-callers are everywhere. And it would not surprise me if we have another one of these up-400 days like we had last week.
What matters is what is different from the last time we were here. I've got a checklist that has some real positives worth noting that could lead me to be more constructive this time around.
Note: I, like others, want to believe in a bottom, but either way I am inclined to buy any selloff until we get overbought, and we are very far away from that.
1. The Bear (BSC - commentary - Cramer's Take) transaction really did matter. It showed you there is a plan -- a harsh plan -- that wipes out lots of equity. (Bear's stock acts as if there is a higher bid, but what I think might happen is that JPM will just pay a little more -- maybe $8.50, which is a billion dollars -- a pittance given the gains in the common stock.)
2. Now we know you don't need to pull your money out of the firm you are at. The JPM deal protected all clients of Bear. This -- despite the endless catcalls I am getting, including now from Jon Stewart - is the point I was trying to make.
Before the plan this weekend, it PAID to take your money out of a troubled broker because it was entirely possible that you would be frozen and maybe go belly-up. Now you don't have to worry.
THIS IS MAJOR. It means that a Lehman (LEH - commentary - Cramer's Take) doesn't have to worry about a run and you don't have to worry about a run. Tough to break the bank given that.
3. The Fed is more ahead than before; given that, it can cut any amount and be OK. Fifty basis points means things aren't as bad as you think and the dollar might rally. (See Bob Marcin on this for a good analysis.) One hundred basis points flushes a huge amount of money off the sidelines.
4. Fannie Mae (FNM - commentary - Cramer's Take) and Freddie Mac (FRE - commentary - Cramer's Take) are up. I can't overemphasize to you how important this is.
Part of what broke BSC was that it was stuck with a huge amount of agency paper -- Government-Sponsored Enterprise paper -- that fell in value vs. Treasuries much more than ever before. That was hard to hedge and was causing runs for everything from Bear to Annaly (NLY - commentary - Cramer's Take). With FRE and FNM going higher, there is a chance they can refinance and then be able to buy their own bonds back, which would be gigantic.
Many are skeptical about FNM/FRE, but there was a little-noticed article this morning in the Journal about how the White House might relent here. OFHEO, the regulator, has been saying they can't do anything with their own bonds even though OFHEO acknowledges there is a surplus in FNM's balance sheet. Ten billion. That can be levered up to $100 billion to buy paper at a gain for FNM. This would be gigantic and raise the marks at all investment firms.
It also smells like some deal's been reached that will make the implicit support for GSE paper more explicit. That's also why I think NLY is going higher.
5. Goldman (GS - commentary - Cramer's Take) and Lehman did a great job, with the former showing us that it can be the next white knight if necessary. That's good to know; we might need them. Lehman and Goldman had a lot of business away from this country, necessary for a higher P/E on depressed numbers.
6. Better earnings: Caterpillar (CAT - commentary - Cramer's Take) and CSX (CSX - commentary - Cramer's Take) told you that the weak-dollar economy is in fabulous shape. We don't want big earnings risk here. Those EPS embolden us, as did their outlooks.
7. Visa comes tonight; the Street wants a big win for us. I believe you will get it.
That's seven reasons that the market may be allowed to lift back to an overbought position. They amount to reasons NOT to sell and to BUY on the next downleg as long as we are oversold.
That's the real positive to me.
At the time of publication, Cramer was long Goldman Sachs and Annaly. "
(in www.realmoney.com)
By Jim Cramer
RealMoney.com Columnist
3/18/2008 10:56 AM EDT
"Here we go again. The bottom-callers are everywhere. And it would not surprise me if we have another one of these up-400 days like we had last week.
What matters is what is different from the last time we were here. I've got a checklist that has some real positives worth noting that could lead me to be more constructive this time around.
Note: I, like others, want to believe in a bottom, but either way I am inclined to buy any selloff until we get overbought, and we are very far away from that.
1. The Bear (BSC - commentary - Cramer's Take) transaction really did matter. It showed you there is a plan -- a harsh plan -- that wipes out lots of equity. (Bear's stock acts as if there is a higher bid, but what I think might happen is that JPM will just pay a little more -- maybe $8.50, which is a billion dollars -- a pittance given the gains in the common stock.)
2. Now we know you don't need to pull your money out of the firm you are at. The JPM deal protected all clients of Bear. This -- despite the endless catcalls I am getting, including now from Jon Stewart - is the point I was trying to make.
Before the plan this weekend, it PAID to take your money out of a troubled broker because it was entirely possible that you would be frozen and maybe go belly-up. Now you don't have to worry.
THIS IS MAJOR. It means that a Lehman (LEH - commentary - Cramer's Take) doesn't have to worry about a run and you don't have to worry about a run. Tough to break the bank given that.
3. The Fed is more ahead than before; given that, it can cut any amount and be OK. Fifty basis points means things aren't as bad as you think and the dollar might rally. (See Bob Marcin on this for a good analysis.) One hundred basis points flushes a huge amount of money off the sidelines.
4. Fannie Mae (FNM - commentary - Cramer's Take) and Freddie Mac (FRE - commentary - Cramer's Take) are up. I can't overemphasize to you how important this is.
Part of what broke BSC was that it was stuck with a huge amount of agency paper -- Government-Sponsored Enterprise paper -- that fell in value vs. Treasuries much more than ever before. That was hard to hedge and was causing runs for everything from Bear to Annaly (NLY - commentary - Cramer's Take). With FRE and FNM going higher, there is a chance they can refinance and then be able to buy their own bonds back, which would be gigantic.
Many are skeptical about FNM/FRE, but there was a little-noticed article this morning in the Journal about how the White House might relent here. OFHEO, the regulator, has been saying they can't do anything with their own bonds even though OFHEO acknowledges there is a surplus in FNM's balance sheet. Ten billion. That can be levered up to $100 billion to buy paper at a gain for FNM. This would be gigantic and raise the marks at all investment firms.
It also smells like some deal's been reached that will make the implicit support for GSE paper more explicit. That's also why I think NLY is going higher.
5. Goldman (GS - commentary - Cramer's Take) and Lehman did a great job, with the former showing us that it can be the next white knight if necessary. That's good to know; we might need them. Lehman and Goldman had a lot of business away from this country, necessary for a higher P/E on depressed numbers.
6. Better earnings: Caterpillar (CAT - commentary - Cramer's Take) and CSX (CSX - commentary - Cramer's Take) told you that the weak-dollar economy is in fabulous shape. We don't want big earnings risk here. Those EPS embolden us, as did their outlooks.
7. Visa comes tonight; the Street wants a big win for us. I believe you will get it.
That's seven reasons that the market may be allowed to lift back to an overbought position. They amount to reasons NOT to sell and to BUY on the next downleg as long as we are oversold.
That's the real positive to me.
At the time of publication, Cramer was long Goldman Sachs and Annaly. "
(in www.realmoney.com)
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Muito bom artigo, novamente, Ulisses 
!
Eu considero este texto um verdadeiro tratado: uma visão muitissimo lúcida, clarividente e fria do actual estado dos mercados de capitais - nos States e na Europa (falo do UK, Ale, Fra e Esp).
Estou totalmente de acordo e por isso vou ficar de fora, à espera de uma real capitulação (queda nos States de 5% min); esta poderá ocorrer em 2-6 meses, mas... com sucessivas más notícias, na sequência da queda nos resultados da generalidade das Cias/sectores em 2008, parece-me inevitável.
Eu aposto num crash durante o mês de Agosto: sempre um mês mau, de liquidez reduzida. Talvez se antecipe para Julho, com a venda de posições para não se ficar com a batata quente na mão.
Os P/E estão muito baixos com base nos lucros passados, mas quando forem revistos com base nos lucros futuros... reparem na Siemens ontem.
Boa sorte a todos.
!
Eu considero este texto um verdadeiro tratado: uma visão muitissimo lúcida, clarividente e fria do actual estado dos mercados de capitais - nos States e na Europa (falo do UK, Ale, Fra e Esp).
Estou totalmente de acordo e por isso vou ficar de fora, à espera de uma real capitulação (queda nos States de 5% min); esta poderá ocorrer em 2-6 meses, mas... com sucessivas más notícias, na sequência da queda nos resultados da generalidade das Cias/sectores em 2008, parece-me inevitável.
Eu aposto num crash durante o mês de Agosto: sempre um mês mau, de liquidez reduzida. Talvez se antecipe para Julho, com a venda de posições para não se ficar com a batata quente na mão.
Os P/E estão muito baixos com base nos lucros passados, mas quando forem revistos com base nos lucros futuros... reparem na Siemens ontem.
Boa sorte a todos.
James Wheat
Position Trader
Position Trader
- Mensagens: 1800
- Registado: 24/5/2006 12:33
- Localização: Porto
Cramer: "No Crash Yesterday, But Was It a Bottom?"
"No Crash Yesterday, But Was It a Bottom?"
By Jim Cramer
RealMoney.com Columnist
3/18/2008 9:16 AM EDT
"Drat, we didn't crash. Really, yesterday we had our best chance to flush out the weak hands that dominate this market. We didn't get rid of the hedge fund sellers of the brokerage stocks -- now bailed out by Goldman Sachs' (GS - commentary - Cramer's Take) numbers, which were pretty fabulous, despite last-minute rumors that they would be terrible. We didn't get the sellers of the oil stocks that would make them stabilize; in fact, they appeared en masse with a $4 crack in the commodity. We didn't get the down 500-point capitulation crescendo that would make it so it would be safe to buy an Apple (AAPL - commentary - Cramer's Take), which I think has bottomed, but which I -- like everyone else -- worry could still go down more, or a Research In Motion (RIMM - commentary - Cramer's Take), which I think is doing well.
Now, it is possible that what we did get was a test of a decline and a hold. That's the most positive interpretation, and I want to believe that there is now a possibility of a real bottom. The Bear (BSC - commentary - Cramer's Take) shock did create panic. It also showed you that there is a way out of a collapse; if we were to get one for all but the biggest bank, Citigroup (C - commentary - Cramer's Take). It showed we can find a way out of a National City (NCC - commentary - Cramer's Take) or a CIT (CIT - commentary - Cramer's Take). We also could get a real cut from the Fed, 100 basis points, that will make a difference. I just question whether the panic was deep and long enough to get rid of those who have challenged us by selling into every rally. I just wonder whether any shorts covered and whether they won't be right back again after a little lift.
But what I really think we got was the oversold bounce, the endless oversold bounce that happens every time we get to minus-5 on the oscillator. This oscillator bounce is pretty much etched in stone as a truism, once again stopping a crash, as it has done every time since the 1987 crash when the oscillator betrayed us the week before, a terrible week that turned out to be just a prelude to a much worse one.
If we HAD gotten the capitulation, I would have said that's about a 75% chance of a real bottom. That means the action yesterday and today is just prolonging the pain.
We need to get in shape, and get out the weak hands because some stocks like Washington Mutual (WM - commentary - Cramer's Take) and Nat City and firms like E*Trade (ETFC - commentary - Cramer's Take) and CIT seem like they are really rolling over, and I want to know if the market is ready for those if they fail. Is the market even ready for a Downey (DSL - commentary - Cramer's Take) to close, given it has 10% nonperformings. Is the market ready if Bank of America (BAC - commentary - Cramer's Take) walks away from Countrywide (CFC - commentary - Cramer's Take) or if Wachovia (WB - commentary - Cramer's Take) cuts its dividend. How about, for heaven's sake, a Citigroup problem of a big magnitude?
Here's what I think will occur: We bounce, the futures lead us, people get bullish again until the next bad event, and we just keep replaying things.
It does seem like we have hit a bottom for many stocks in the good economy, but without that whoosh, that crescendo, I believe there are tons of weak holders that are just waiting to get out and tons of shorts getting ready to lean again after any lift.
I look at so many stocks right now and I think, "Hmm, they have held": Caterpillar (CAT - commentary - Cramer's Take), Procter & Gamble (PG - commentary - Cramer's Take), IBM (IBM - commentary - Cramer's Take), Verizon (VZ - commentary - Cramer's Take), Du Pont (DD - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take), AT&T (T - commentary - Cramer's Take), GE (GE - commentary - Cramer's Take), McDonald's (MCD - commentary - Cramer's Take), Chevron (CVX - commentary - Cramer's Take), Disney (DIS - commentary - Cramer's Take), Wal-Mart (WMT - commentary - Cramer's Take), tons of Dow stocks.
Again, though, the lack of a disastrous market yesterday says to me we still have hedge fund and mutual fund redemptions that will push down stocks once we are no longer oversold.
That means, enjoy the bounce but when we get to the next overbought level, you have to trim inventory again, because even though we will have lower cash rates, courtesy of the Fed, we will NOT have good earnings and we will not have strong hands. That means more up-and-down action with more stocks ending down than up, particularly in the ever-declining financial sector.
At the time of publication, Cramer was long Goldman Sachs, McDonald's, Verizon and Schering-Plough, and was long GE as part of his contract with CNBC. "
(in www.realmoney.com)
By Jim Cramer
RealMoney.com Columnist
3/18/2008 9:16 AM EDT
"Drat, we didn't crash. Really, yesterday we had our best chance to flush out the weak hands that dominate this market. We didn't get rid of the hedge fund sellers of the brokerage stocks -- now bailed out by Goldman Sachs' (GS - commentary - Cramer's Take) numbers, which were pretty fabulous, despite last-minute rumors that they would be terrible. We didn't get the sellers of the oil stocks that would make them stabilize; in fact, they appeared en masse with a $4 crack in the commodity. We didn't get the down 500-point capitulation crescendo that would make it so it would be safe to buy an Apple (AAPL - commentary - Cramer's Take), which I think has bottomed, but which I -- like everyone else -- worry could still go down more, or a Research In Motion (RIMM - commentary - Cramer's Take), which I think is doing well.
Now, it is possible that what we did get was a test of a decline and a hold. That's the most positive interpretation, and I want to believe that there is now a possibility of a real bottom. The Bear (BSC - commentary - Cramer's Take) shock did create panic. It also showed you that there is a way out of a collapse; if we were to get one for all but the biggest bank, Citigroup (C - commentary - Cramer's Take). It showed we can find a way out of a National City (NCC - commentary - Cramer's Take) or a CIT (CIT - commentary - Cramer's Take). We also could get a real cut from the Fed, 100 basis points, that will make a difference. I just question whether the panic was deep and long enough to get rid of those who have challenged us by selling into every rally. I just wonder whether any shorts covered and whether they won't be right back again after a little lift.
But what I really think we got was the oversold bounce, the endless oversold bounce that happens every time we get to minus-5 on the oscillator. This oscillator bounce is pretty much etched in stone as a truism, once again stopping a crash, as it has done every time since the 1987 crash when the oscillator betrayed us the week before, a terrible week that turned out to be just a prelude to a much worse one.
If we HAD gotten the capitulation, I would have said that's about a 75% chance of a real bottom. That means the action yesterday and today is just prolonging the pain.
We need to get in shape, and get out the weak hands because some stocks like Washington Mutual (WM - commentary - Cramer's Take) and Nat City and firms like E*Trade (ETFC - commentary - Cramer's Take) and CIT seem like they are really rolling over, and I want to know if the market is ready for those if they fail. Is the market even ready for a Downey (DSL - commentary - Cramer's Take) to close, given it has 10% nonperformings. Is the market ready if Bank of America (BAC - commentary - Cramer's Take) walks away from Countrywide (CFC - commentary - Cramer's Take) or if Wachovia (WB - commentary - Cramer's Take) cuts its dividend. How about, for heaven's sake, a Citigroup problem of a big magnitude?
Here's what I think will occur: We bounce, the futures lead us, people get bullish again until the next bad event, and we just keep replaying things.
It does seem like we have hit a bottom for many stocks in the good economy, but without that whoosh, that crescendo, I believe there are tons of weak holders that are just waiting to get out and tons of shorts getting ready to lean again after any lift.
I look at so many stocks right now and I think, "Hmm, they have held": Caterpillar (CAT - commentary - Cramer's Take), Procter & Gamble (PG - commentary - Cramer's Take), IBM (IBM - commentary - Cramer's Take), Verizon (VZ - commentary - Cramer's Take), Du Pont (DD - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take), AT&T (T - commentary - Cramer's Take), GE (GE - commentary - Cramer's Take), McDonald's (MCD - commentary - Cramer's Take), Chevron (CVX - commentary - Cramer's Take), Disney (DIS - commentary - Cramer's Take), Wal-Mart (WMT - commentary - Cramer's Take), tons of Dow stocks.
Again, though, the lack of a disastrous market yesterday says to me we still have hedge fund and mutual fund redemptions that will push down stocks once we are no longer oversold.
That means, enjoy the bounce but when we get to the next overbought level, you have to trim inventory again, because even though we will have lower cash rates, courtesy of the Fed, we will NOT have good earnings and we will not have strong hands. That means more up-and-down action with more stocks ending down than up, particularly in the ever-declining financial sector.
At the time of publication, Cramer was long Goldman Sachs, McDonald's, Verizon and Schering-Plough, and was long GE as part of his contract with CNBC. "
(in www.realmoney.com)
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