Thursday, July 31, 2008

Just So You Know....

Maybe he will be right (for once). I won't complain - I am fine with a new bull market starting right here. Overall, however, this doesn't make me more bullish. I usually use Cramer as a contrarian play.

Article Courtesy of CNBC.com - Original link is here
Jul.30
7:10 PM ET
13 hours ago
Yes, the Market Has Bottomed
Posted By:Tom Brennan

If you thought you heard Cramer call a bottom during Tuesday’s Mad Money, you were right.

“It smells to me like something, in fact many things,” he said, “have at last changed for the better.”

“I am indeed sticking my neck out right here, right now,” Cramer continued, “declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15. and I think anyone out there who’s waiting for that low to be breached is in for a big disappointment and [they’re] missing a great deal of upside.”

“Stop waiting,” he said, and “buy the next dip because I think it might be the last big one.”

Cramer pointed to five specific clues that proved to him that the market was about to turn up.

One is that the negativity is so bad we might be at the point of total capitulation. The investors Intelligence Survey reported a 30% bull-50% bear ratio. Fifty percent bearish! Who’s left to sell? That kind of despair and disbelief has historically been a sign, Cramer said, that the darkest part of night was ending and dawn was near.

Then there were the power moves yesterday by Merrill Lynch

MERRILL LYNCH & CO INC
MER

26.91 UNCH 0
NYSE
, whose newly issued stock is up more than 10% from its offering price. Merrill showed the rest of the banks that they, too, can unload all that bad paper, the CDOs, and cut a deal with the bond issuers to repair a much-damaged, and very important, business relationship. Now Lehman Brothers , Citigroup and Wachovia can follow suit.

Also, plenty of couples have proved through recent earnings reports that they’ve been able to handle the commodity inflation that plagued the market for so long. Just look at the rails, Colgate-Palmolive

COLGATE PALMOLIVE CO
CL

74.97 UNCH 0
NYSE
, Cummins , Avon and U.S. Steel . How’d they do it? Price increases. And now that raw costs have come down, Cramer’s expecting a load of upside surprises because those price increases will stay put. (Cramer said the decline in gold just serves to verify the commodities crash.)

The Securities and Exchange Commission announced it will continue to protect 19 banks in danger of having massive hedge funds short sell them into the ground. This is key because, as Cramer said, it’s this protection that allowed for the Merrill deals to happen. Now other banks are safe to proceed with their own deals, and the market rally can continue.

The last piece of the puzzle is the housing bailout President Bush signed into law this morning. Bank of America

BANK OF AMERICA CORP NEW
BAC

33.61 UNCH 0
NYSE
, Wells Fargo and all the other major banks can now sell their bad mortgages to the Federal Housing Authority for 80 cents on the dollar. And despite what you think, that’s actually a mark up, not a mark down, compared to what they’d be worth if the FHA didn’t step in.

Cramer’s predicting the rally continues Thursday thanks to great after-the-bell earnings from The Walt Disney Co. and First Solar

FIRST SOLAR INC
FSLR

285.00 UNCH 0
NASDAQ
. And who knows what could happen after Mastercard reports in the morning.

“My bottom call isn’t gutsy,” Cramer said. “I think it’s just a smart call that all the evidence points toward.”

“Bye, bye bear market,” he said. “Say hello to the bull and don’t let the door hit you on the way out.”

1 comment:

Anonymous said...

Well, in the end, if he's wrong, he's also very much an entertainer, and even bad publicity can be good.
Personally, I'd like to see the indices close above their resistance levels first and maybe bounce once. QQQQ couldn't break through today.