Cramer's Mad Money - Mutual Fund Monday (5/4/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday May 4.

Mutual Fund Monday: Wells Fargo (WFC), General Motors (GM), JP Morgan Chase (JPM), Goldman Sachs (GS), U.S. Steel (X)

Cramer declared the 219 jump in the Dow a sign of mutual fund Monday - big money is flooding into the market and it isn't going to be finished so soon. He would ignore bearish sentiment and trust the rally. Cramer debunked five big worries:

1. Banks won't pass the stress test: Warren Buffett has said the stress tests are too tough, which is good news for those banks who don't score high marks; Wells Fargo rallied in spite of observations that it needs to raise capital.

2. Housing won't bottom: On the contrary, Cramer says sales of homes is increasing in Florida and California

3. Obama will make General Motors fit into Chrysler's mode and will raise taxes: Cramer notes GM's Saturn division might find a buyer, and he doesn't think Obama's criticism of certain hedge funds are an indication of an anti-capitalist attitude, particularly when he stands behind Goldman Sachs and Morgan Stanley.

4. Construction-Related stocks such as U.S. Steel have risen too fast. Cramer thinks there is more upside in this space, particularly with demand ramping up in China and a strong construction number.

5. Swine Flu. This scare has not turned out to be quite the pandemic the fear mongers were expecting, Cramer commented, and its impact is already starting to wane.

Bring Back the Uptick Rule! with Senator Ted Kaufman [D-DE]

Cramer has been on a mission to reinstate the uptick rule and discussed this possibility with Senator Ted Kaufman, who said he believed SEC Chairwoman Mary Schapiro will do the right thing. If this does not happen, he has a proposal with bipartisan support, and will work towards getting it passed. Senator Kaufman thinks a delay may be an indication that the SEC doesn't want to acknowledge past errors,

Google (GOOG), Research in Motion (RIMM), Apple (AAPL), Amazon (AMZN), Tekelec (TKLC)

The tech rally won't quit and Cramer observes that even stocks in the sector that have already run still have significant upside. While tech standbys Google, Research in Motion, Apple and Amazon might still be worth buying, Cramer thinks going with a speculative name like Tekelec will pay off. Tekelec produces equipment for text messaging and voice messaging for wireless networks, as well as technology that allows users to keep their numbers even if they switch carriers. Tekelec has five of India's seven largest carriers as customers, which is good news in the country with the fastest-growing wireless market on the planet. The company's balance sheet is clean, it has $4 in cash per share and trades at a mere $15. Cramer would wait until after its earnings on May 7th before buying.

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Comments

[drini:]

Cramer is full of shit, this guy should be removed from the media and has destoryed many lives. The market is not rallying on fundamentals but pure speculation. The volumes are low and seem to rally on short squeeze just before the end of day. Pure manipulation and program trading. Everyone is piling on to one side of the trade. This will likely end the same way when everyone tries to getout. Look at all crises from LTCM, credit bubble and tech bubble eveyone was executing the same stratergy with leverage and boom. To me it looks like the GS is big on this program trades. They gap up the indexes in pre mkt hours on very low volume and at the start, eveyone piles on throught out the day and then same crap at the end of the day. Also the main media is so maipluated, blogs are much better place to go.
Banks are still in such bad shape and the housing is not coming back for 3-5 years atleast, big wave of option amrs, NIJA alt-A loans coming due this year end much bigger then the sub-prime, not sure how long the banks can last. IThe securties these firms hold are lost value for good, also big trouble in the corp bond mkts, eastern euro, middle east, South America. Hope the feds and treasury are paying attention to these and make sure the banks do not leverage up.

As for the technology as cramer points out, I think they will get hit i cannot see why companies are going to buy new hardware and software eveyone is cutting bdgets. Same goes with the consumers(16M unemployed in the US but worldwide likely about 150million lost jobs and income). Cell phones are reached close to peak demand, same with PC's, games etc.

Big money flowing if actually check the voumes below normal vols, skew by few names like BAC, C the usuall program trading issues.

more can be said, but it better to stay out of this rally and not short the stocks either.

May 04 10:48 PM

[Industry ex...:]

RIM has ballooned too fast and now all the dumb money is entering the market now. I am so glad I recently got out and took my profit. All the people buying in on this recent news are fools. Same pattern happened over the past few months. Geeze people, look at the past several months. There is a cycle here and you are not seeing it.
Ah, in case you forgot, we are in the middle of a MAJOR RECESSION!! We are in for another correction before we rebound!
I dont care if the consumer market is picking up for RIM, the valuation is over the top for this stock in the current market. Everyone is cutting back spending and we are in for another correction on RIM for sure!!! Say bye bye to your money if you get in now, unless of course you are holding for a very long time....good luck. Remember the golden rules - Buy low/Sell high and Sell on news!!! :-)

May 04 11:14 PM

[Pessimistic...:]

Drini.. lots of doom and gloom. If the markets goes bust you hit it on the head, if not.. well... you lost more. As these stocks climb I protect with tighter stops. To not play this as a trader's market is just crazy. Over 35% in 1/3 of my portfolio and still going? You kidding me? I am still trailing up. If the mutuals are coming to play.. when will the bubble pop? It could go another 20-30%. Still doesn't match my downside but as I see it, taking profit and then coming back in after a 15 to 20% retracement will at least close the gap. I believe we have at least 5% more upside then will consider easing out. Not gonna be a hog. I would like to see it spread through-out the week as opposed to hitting in one day..like by Friday.. I will most likely be out the door or my stops will hit and I will be out sooner.

May 04 11:22 PM

[Auto Employee:]

Cramer is an annoying fool who does not know what he is talking about. I was so glad when Jon Stewart put him in his place, he was speachless didn't know how to respond to someone who found his rants ridiculous and childish not to mention the harm he causes. To have the forum he does they would be well advised to put someone in there who approaches this all important business as an adult would not with the display he puts on, there is too much stress out there these days to find any humour in that juvenile act he puts on.

May 05 08:24 AM

[Michael Del...:]

Pessimistic Optimist has it right. Why is it foolish to buy into this rally if you carry tight trailing stops? Take what the market will give you. Ride it while you can. I do not short trade, so I will sit in cash if the market reverses. But for right now, it has been a fun 4 weeks.

"this all important business as an adult would not with the display he puts on, there is too much stress out there these days to find any humour in that juvenile act he puts on" Sorry, but this business is not all important. There are many things in life more important. Some people have forgotten that trading stocks is supposed to be fun. I enjoy Cramer's antics, so I watch him. If he bothers you, turn him off. But don't call me a fool because I enjoy his show.

May 05 09:17 AM

[Auto Employee:]

Michael Delaney

Oh the stock market is just for "fun" good to know, you and Cramer have a blast then! Silly me I thought it was a little more important to the state of our economy, glad you took the time out of your day to set me straight. I'm sure all the people that invest their hard earned money are pleased to give you two a good laugh every day! Wow, people never cease to amaze me!

May 05 02:19 PM