A Perfect Contrary Indicator
This morning, before the market opened, Jim Cramer wrote:
“Run, don’t walk, to the things that Doug Kass is hearing. They will define today’s show, and Dougie’s got a hot hand with this bank call. You need to get the agenda for the day — Doug is setting it.”
“Hot hand?” The BKX banking index was down 3.68% today! Kass’s baby, Citigroup was down 1.82%. (C was rejected at the $21.25 resistance yesterday and today. If it can’t mount another charge tomorrow, a test of last week’s low will be in the cards.)
The BKX also closed below its March 2003 low today, and is now plumbing the October 2002 lows. Some people are expecting that to be a support area, and while there should be at least one bounce, we have to remember that the real-estate business was very strong back then, and is hardly alive now. There is no fundamental reason why the banks should hold at that level.
Kass was on Kudlow last night and stated that he thought the capital-raise for the banks was 90% complete. Today, Goldman Sachs said banks need another $65 billion. Of course, Goldman profits from these offerings since that is one of its businesses, and they might be engaging in a bit of salesmanship, but I am more inclined to believe their estimate.
I don’t subscribe to Kass’s letter, but I hoped that he bailed out of his C position today…
Jim Cramer, you were high on banks on the very day that they took out their March 2003 lows. Hang your head in shame.
June 17th, 2008 at 10:51 pm
Jim Cramer is nuts. I use him to figure out which stocks to short. Trust me when I tell you that it provides absolutely fabulous returns.
- SK
June 18th, 2008 at 11:59 am
Hi SK,
I don’t doubt it. I remember a few years ago when traders were calling him a contrary indicator. Cramer responded by challenging them to come and trade against him.
I think Cramer is very knowledgeable about a lot of things, but a lot of his trading calls are just comical. His “home-builders have bottomed” calls are probably up into the triple digits now. Some of them might have been OK for short term trades, but he has been so wrong on this it is astounding - especially when you consider that Bob Toll has been urging him to stop being so bullish on the stocks! Cramer won’t listen!
Matt