Cramer's Four Horsemen Back in the Saddle

After Cramer turned his back on his four horsemen (with the exception of RIM) in March, the stocks have been on a tear. As shown below, Apple (AAPL) is up 55% from its bottom, Google (GOOG) is up 44%, RIM (RIMM) is up 58%, and Amazon (AMZN) is up 22%. Cramer recently said he was sorry for turning negative on Google and relying on comScore's unreliable data.

As shown in the charts below, AAPL, GOOG and RIMM have each reached extreme overbought territory, all trading more than two standard deviations above their 50-day moving averages. While it's great that these things have made solid comebacks, the risk/reward tradeoff for the bulls favors the risk side in the short-term.

click to enlarge

Comments

[bobobob]

So he abandoned AAPL at $121.73, what does he think of it now at $184? I wonder what he'll say when the stock passes $203 in the next month? Do any of the people paying Cramer premium content make money with this kind of advice?

[ssross]

Bobobobob - Actually Cramer told everyone to sell AAPL last year at about 190 to 200 and then told everyone to buy back in at about 135. He's still bullish. This one he got right. Check your facts.

[bobobob]

It's hard to tell what he actually said because on that lightning round link for March 3, 2008 < www.madmoneyrecap.com/daily_recap_lightn... ;, he actually had the thumbs down on AAPL at $121.73. So I guess he is talking on both ends :P

If you have a link for that call to BUY AAPL at $135, I'd like to see it.

[globalmacro]

Cramer gets it right 49% of the time so he's better than most mutual fund managers.

[Roy Flanders, Nantucket]

Jim, it's about time you rethought hanging out in the Apple woodshed with Shaw Wu-- sorry; I'm sure you're good old bud's from way back. But his nonsense is starting to rub off on you.

We've all heard the various "rumors" going way back on Mr. Wu; I like you- I do! and I'd stay away from Wu's woodshed in any case.

Forget stocks! We all follow you simply for the pure, unmedicated, entertainment. (Maybe your old buddy Larry could give you a tip or two.)

Roy Flanders
Nantucket, MA

[icandoitdon]

cramer is a momentum investor. it it's up he likes it...if it's down he doesn't. you don't need advise for that kind of a strategy.

[User 59050]

i really like the charts used in this article with the "overbought" overlay on the chart. does anyone know where that chart layout comes from? i know it is not stockcharts or bigcharts. anyone know? thanks so much.

[Jonathan Liss, SA Editor]

I'm pretty sure it comes from Bespoke Investment Group themselves - I've never seen it anywhere else. I'd check their website for more details: bespokeinvest.typepad.com /

[dga]

The charts are called Bollinger Bands.

If you have access to Reuters research reports (for example, in
the Charts section of ETrade), they appear in those reports along
with the following explanation:

Technical analysts believe a narrowing of the bands suggests a significant price movement, up or down, will soon occur. Also, many say stocks that move outside the bands and then back inside will soon move toward the opposite band.

[virtualdream]

Yes these charts are all going up and up but not without some major pull backs along the way ie. end of March/beginning of April (in nearly all cases). And I really don't think they can be all called among equals. Amazon and RIMM both have their up and downs but seem to be more conservative buys at this point and I think will go much higher. I think part of the problem in the stock market right now is some stocks are trading well in the 100's of dollars (and these are NOT Warren Buffet companies), for most traders this is a crap load of money to shell out on one or two stocks. How do you keep your eggs not all in one basket and diversify at these prices? I have a few (just a few) eggs in many of the high hitter baskets. When POT took a dive I move my money to APPL (a bit lower at the time) and then moved it back. And then split the difference. I wish some of these high hitters would split that would allow more investors to get in and some of us that have these to get more value for our buck. That would work for everyone. I think APPL is due for a split. Some of Jim's picks have done really well while others haven't ... but that's the nature of his business - if we were 100% clairvoyant all of the time in our picks, that would make the stock market very boring. You shouldn't put all your eggs all in one basket and you should not trust the guidance of one - diversify your guidance.

[wadexyz]

For years, people continue to analyze Cramer's results and get all bent out of shape about him and his TV show. Get a life!

But I really think everyone is missing the point. It's not about whether his picks are working or not working. What I think he's trying to get across is the psychology of the market, hedge funds, etc.

Instead of watching Mad Money to blindly follow picks (this will not work, ok!).....ppl should instead be trying to generate their own ideas from watching how his mindset works, and apply these newly generated ideas to pick their own stocks.

And if you feel you get nothing out of it, don't watch.

[globalmacro]

So when he says the bottom is in with financials, short financials. And when he says Google is toast, buy Google. I get it now wadexyz. Thanks for the education. I couldn't have done this without your insightful advice.