Cramer's Mad Money: Four Signs of an Upcoming Rally (1/23/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV show, Friday January 23.

Four Signs of an Upcoming Rally: Apple (AAPL), Google (GOOG), Microsoft (MSFT), Research in Motion (RIMM), Nokia (NOK), Sony (SNY), Exxon Mobil (XOM), Pfizer (PFE), Wyeth (WYE), Bristol-Myers Squibb (BMY), Novartis (NVS), AstraZeneca (AZN), Eli Lilly (LLY), Forest Labs (FRX), Goldman Sachs (GS), Morgan Stanley (MS)

Cramer thinks there is going to be a big rebound rally. Here’s why:

1. Tech is back. With Apple’s awesome performance, Google’s better-than-expected quarter and Research in Motion’s strong sales, the tech sector is showing signs of health. While Microsoft is not holding up, companies that make cool, trendy products are the ones to watch and are leaving “uncool” names like Nokia and Sony in the dust.
2. Oil is stronger. While Exxon was down on Friday, Cramer thinks Exxon (which comprises 5% of the S&P, more than the financials combined) could work its way up and spark a rally. Oil prices need to remain solid for a couple of days to create an upturn.
3. The Pfizer-Wyeth Merger. This $60 billion deal could lead to more M&A activity as investors make trades based on takeover speculation. In the coming week, Pfizer, Wyeth, Bristol-Myers, Novartis, AstraZeneca and Eli Lilly report earnings, but Cramer would take a look at Forest Labs, which will need acquisitions to continue its strong growth.
4. Goldman Sachs and Morgan Stanley are coming back. Neither one of these financial giants has exposure to mortgages or consumer credit. As Goldman rises, it may have to do another equity offering to repay TARP fund. Cramer thinks Goldman will keep looking better and better.

Of all the above-mentioned stocks, Cramer thinks Apple, Google, Goldman Sachs, Forest Labs and Research in Motion are the ones to buy.

Speculation Friday: Abbott Labs (ABT), Pfizer (PFE), Wyeth (WYE), Celera (CRA), Sequenom (SQNM), Martek Biosciences (MATK)

Big Pharma is a bit worried about the present administration, since Democrats aren’t seen as being the best friends of major drug companies. More M&A activity is expected from the sector, according to Cramer, as a way of battling the generics. Pfizer is buying Wyeth, and CEO Miles White of Abbott Laboratories says he was a willing buyer if there was a willing seller. That willing seller might just be Celera, which produces cardiovascular lab diagnostics and has paired up with Abbott to make molecular diagnostic products. Celera’s current joint venture with Abbott and its KIF6 genetic test are sufficient reasons to buy the stock. Celera’s acquisitions Berkeley Heartlabs and Atria Genetics brought sales up 123% in the last quarter, and with the company’s potential to grow earnings per share by 50%, the multiple of 41 times forward earnings may seem worth the risk. Emphasizing the fact that Celera is a speculative stock, Cramer advised viewers to wait five days before buying, to invest in increments and to use limit orders. Cramer mentioned two other potential takeovers for Abbott: Sequenom and Martek Biosciences.

Cramer’s Outrage: John Thain and Tim Geithner with stocks Merrill Lynch (MER) and Bank of America (BAC)

While Cramer says he would be sharing a cell with TYCO CEO Dennis Kozlowski if he tried to get away with “financial murder,” Former Merrill Lynch CEO John Thain and the next Treasury Secretary Tim Geithner will be walking free. “Being hounded by the press until the next top story just doesn’t cut it,” fumed Cramer, although given the influence these two men have, they will not only get away with it, but John Thain might get the Congressional medal of honor for office decoration (alluding to $1.2 million he spent decorating his office) and Tim Geithner will probably be given a tax refund and an apology from the government, remarked Cramer. In the case of Thain, it’s personal; Cramer blames Thain’s influence in his faulty New York Stock Exchange call and he says Thain also pantsed Bank of America. No one is asking where Geithner stands on the important issues, and the public is “too afraid or too in love with him” to ask why he allowed Lehman Brothers to collapse, probably the worst decision the government has made in the entire crisis. “But Thain walks off with billions and Geithner goes to Washington…what a wonderful life,” said Cramer.

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Comments

[ilovesum:]

Can't say I agree about the rally anytime soon , or at least until housing stabilizes.
govt , madoff and ceo's lying , giving themselves bonuses regardless of their performance and essentiallialy stealing from the shareholders with no
prosecution or repercussions .
Tell me how madoff gets pinched then starts mailing (ie fradulent conveyance) of items that were the result of his ponzi scheme and that were to be seized and returned to shareholders. They bust him for a massive scam , he goes home , without a beat does another illegal action , goes home again , what a wonderful system .
This are the things we know about , what about the ones we don't ???
Greenspan keeps interest rates falsely low , creates housing bubble.
Govt removes banking , brokerage rules to facilitate banking , housing and stock market bubble.
The govt has been strong arming deals that are ridiculus making the few not bankrupt banks vulnerable . How does that make sense ?
The govt gives 350 BILLION and doesn't know where it went ?????
Yeah investors should just believe they're not going to get screwed again ????
So the govt that created the problem are the ones we are relying on to save us ? What a scary thought !!!
It amazes me with all this crazyness that anybody is holding stocks.

Jan 27 02:14 PM

[Harry Tuttle:]

Why do people continue to listen to this guy? Is there anyone who actually believes one can make money by following someone on TV?

Jan 27 03:11 PM

[David White:]

Every time analysts, probably Cramer included, try to push you in one definite direction, you need to think seriously about possibly doing the opposite. There are several things that are now arguing against a sustained rally. First the job losses have been incredibly bad this year so far. This has been especially true in the last few days with 70,000 jobs lost on Monday alone. This means the unemployment rate is worsening. This means all of the credit holders of mortgages, credit card debt, etc. have even more to worry about this year.

Second there more credit defaults than expected. The earnings results for the S&P500 have been generally worse than expected. Without the stimulus package money, there is no hope of stopping the downward exonomic spiral. We keep hearing about Republican opposition, which is a definite negative to the markets.

Finally oil was down substantially today. It reports reserves tomorrow. Oil Stocks have been growing every week lately. With oil up the last few days, some of those storage tankers sitting in the Gulf likely delivered this week. Oil stocks are likely up again. This should push the oil prices further down. The oil prices decreases will likely take other commodities and the equities markets with them.

Jan 27 09:52 PM

[agd108:]

Short rally until summer or late summer, then prolonged downturn.
www.advicetrade.com/ww...

This makes sense with a start of inflation as well.

Jan 28 11:10 AM

[cmdrrgh:]

Harry you have to admit the guy is funny to watch, for the most part you do the opposite of what he says.

Jan 28 09:07 PM

[vonPfahl:]

I posted this comment to the Washington Post in responce to a rather bent article. Cramer I would like your take.

The Washington Post has somehow let some strange twisted writers get loose in their pages since I worked there.



Government jobs or more money for the greedy?



The article "FDR Was a Great Leader, But His Economic Plan Isn't One to Follow", starts out with a seriously out of context event (The young man hanging him self is indeed part of the rotten price that will be paid when a nation is learning how to fight the disease of greed - Even when things are getting better there are going to be many, many very sad events) It is wrong headed to blame the cure for the diseases on on going symptoms.


I for one hope that President Obama does not keep following the supply siders lead of giving our money to big business to make themselves safe and rich. So far we have clearly seen the results of that. Big business just pays them self's giant bonuses and they keep the money for buying up other businesses for the future. That clearly is not an economic recovery.



No, we indeed need the jobless to have jobs and those jobs should lead to cheaper energy, cheaper food, cheaper housing, cheaper ways for the American people to live a good daily life. So the American Energy Job Corp needs to be a Government Agency that employs hundreds of thousands of Americans creating the Wind Turbines, the Solar Fields, and finding a way to produce on the spot hydrogen. If you read this and agree send an email to the White House telling them you do. The web address is, "www.whitehouse.gov/con.../". Reference this comment "Government jobs or more money for the greedy" in the subject line.



The American Bridge and Road Administration to rebuild the Bridges and Roads to support a better America needs to be a government Agency, not a give-a-way to the same greedy people who are continuing to steal your life savings. They will just keep stealing it.
President Obama is the smartest President we have ever had, Let him use the one example of a successful recovery and fine tune it to get us out of the "DEREGULATED MESS' the supply siders, the "GIVE IT TO THE RICH SO THEY CAN DROP CRUMBS ON OUR PLATES", left us with after G W Bush.



We know that the diseased economy we were left with is going to kill all to many of us, and it is not going to stop killing us until the whole diseased economy has been fixed. But don't blame the deaths on the Doctor who mightily fought the disease with the best he had. And don't blame the cure for not being instantaneous. It will not be instantaneous, we are going to suffer. Just don't keep giving our life's blood over to the greedy people who gave us the disease. That is to much to bear. We Americans together can cure this. We Americans together are our government and I would rather see a $100,000 dollar a year government manager run a cheap energy program than a $400 Million dollar a year greedy government contractor president, or anyone else who thinks they are worth 1000 times and hour what the rest of us are worth.



Give us jobs, lots and lots of government jobs that produce what we need here in America, and stop the money from leaving the communities it needs to circulate in and going to international banks and other countries. We need the money to be spent here, now, not invested in what is best for a bank, or a international company, or some rich guy making sure he and his has it all.



Dubai is doing it with all (our - oh I mean) their oil profits. Saudi is doing it. As Americans we need to Build America not line the pockets of the rich and people who use our hard earned (but now spent on oil from other counties) savings.



Don't leave this decision up to big business or congress, contact the President Today at: www.whitehouse.gov/con.../.
Reference this comment "Government jobs or more money for the greedy" in the Subject line.

www.washingtonpost.com...



Living in a small town and reading about the elderly who freeze to death because they have no heat, and that the charity budgets are all but gone, gives one a different view from the one I had living in Northern Virginia.

Feb 01 02:36 PM