Cramer's Stop Trading! The Theme for 2011: Intraday Sell-Offs (1/4/11)

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Includes: AGN, CELG, MRK, PEP, PFE
by: Miriam Metzinger

Stocks discussed on Jim Cramer's Stop Trading! TV Segment, Tuesday January 4.

Pfizer (NYSE:PFE), Merck (NYSE:MRK), Allergan (NYSE:AGN), Celgene (NASDAQ:CELG), Pepsi (NYSE:PEP)

The new year saw a strong rally, but Tuesday's action revealed a lack of conviction in a bullish 2011; "People are just waiting for a correction," said Cramer.

The flight into pharma was rather unconvincing, since there was no catalyst driving these stocks nor was there demonstrable weakness in the economy. Allergan's (AGN) climb was understandable, given its migraine treatment, and Celgene (CELG) had a boost on insider buying, but Merck (MRK) and Pfizer (PFE) were up for practically no reason. The fact that Pepsi (PEP) didn't also rise, which is an indication of a general flight to defensive stocks, shows the pharma rally didn't have legs.

The bearish sentiment on Tuesday provided an opportunity to buy oil, which was down $2. Contrary to what the oil bears say, the commodity is not being manipulated by hedge funds, rather, there is real, growing worldwide demand for the commodity and hedge funds are actually in sell mode.

"Every time you see a rally, people say it is unsustainable," Cramer said and predicted, "Intraday selloffs are going to be the theme for 2011." He suggested buying good stocks on intraday declines.

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