A Chance to Sell - Cramer's Stop Trading! (9/2/08)

Includes: APC, HLF, M, X
by: Joan Wickham

Recap of Jim Cramer's comments on Stop Trading! Tuesday September 2.

Commodities Action

Tuesday’s market action was a classic faded opening said Cramer. Falling oil prices drove up the Dow Jones Industrial Average nearly 250 points only to give back those gains later in the day. “Everybody who didn’t like the market last week got the chance to sell,” Cramer said. But Cramer is “far less concerned” about most areas of the sell-off than he is about watching the housing and banking indexes. He does not disregard the potential for the sell-off to be “pronounced,” with the market so thin and exchange-traded-fund selling further driving down stocks, but as long as those two sectors do well he’s willing to live with the market’s volatility. “I think these are the two indices,” Cramer said of housing and banking, that they “are going to lead us out of this jam.” Downward pressure in commodities is hurting S&P 500 stocks.  The S&P’s biggest losers Tuesday are mostly oil or coal related. But the dips of the S&P and oil and coal, are to be expected. Commodity-related stocks have had a nice run, so “when you get them down so dramatically,” Cramer said, “they can do damage.”

Favorites and not so Favorites - U.S. Steel (NYSE:X), Anadarko Petroleum (NYSE:APC), Macy (M), HerbaLife (NYSE:HLF)

If you hold U.S. Steel, down $8, you’re not going to get a great market.” The way some oil and gas stocks have been declining, you’d think the price per barrel of oil was headed to $50, Cramer said, and natural gas going as low at $3. But that’s not going to happen. “I think we’re going to reach a floor,” he said. His advice is to start buying the companies with good buybacks and cash reserves whose stocks are down $6-$8 – or more. Anadarko Petroleum is Cramer’s favorite right now. He calls the company “way too cheap.” Cheaper prices at the pump may be the reason Macy’s is doing better according to Cramer. As one great consumer cost declines, shoppers are free to spend some of their money on things other than just energy making Macy’s a buy. Lastly, a group that criticized HerbaLife’s products for containing too much lead has retracted its claim. The company will make a presentation at Goldman Sachs’ retail conference Wednesday. Cramer recommended that investors watch for news coming out of that. “They have a lot of good things to say,” Cramer said.

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