At the beginning of his “Mad Money” TV show on THE SHOUTING CHANNEL today, Jim Cramer told his viewers to sell their energy and minerals stocks tomorrow (Thursday):
“We raise some cash buy letting go some of our huge winners in oil & gas, in copper, in coal.”
Cramer went on to tell his viewers to “ring the register”, don’t be greedy, don’t be a hog, and that you don’t have gains until you take them off the table.
“Retail” investors like Cramer’s viewers got sucked into the March-to-May bear-market rally in large numbers. This was the first time net money flowed into US stocks in a year – see the chart here. Only the masses can cause a move like that.
How much of this retail money has bugged-out already? There’s really no way of knowing that, but I’ll bet that it isn’t done yet. Cramer is usually late to catching onto what the market is doing, so he may be kicking off the final, though perhaps biggest, wave of selling.
He’s trying to be a hero by attempting to hit the top in commodities. Hoping that will be his “claim to fame” for the next 24 months.
He has given so much bad advice. But that doesn’t mean he is wrong this time in a medium term perspective.
Anyway Matt, you know which buttons to push when you can start to ski the graphs in oil, coal, oil service, etc. Keep it in the back of your mind.
What do you mean Cramer gives bad advice? JSDA was a fantastic call, no? Heh… I haven’t watched him since except on clips where people show him making a fool of himself.
Sydney down 2.3%. Oslo down 2.2%. And oil at 145.
Bombay down 5%.
Money is tightening at enourmos speeds around the world folks. Forget the inflation camp. We’re going down.
Hi Larry,
I don’t think Cramer is trying to call a top in commodities. He is simply panicking. Cramer makes every possible prediction every day, so he is simultaneously right, and wrong, about everything at all times!
I think oil will be the last thing to crack. The chart is still definitely not ready for skiing.
Matt T.
Hi Matt,
I still watch and read Cramer. He repeats a lot of good information from people “in the know” such as Bob Toll. Cramer has a lot of high-level contacts. He is also a very valuable contrary indicator at certain times.
Matt T
Matt:
War with Iran looking LESS LIKELY. As I suspected the recent round of threats were mainly psywar operations.
This could trigger weakness in oil and set off a powerful bear market rally.
Israel Won’t Attack Iran Without US Nod
posted by ROBERT DREYFUSS on 07/03/2008 @ 11:30am
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Writing in the Washington Post, Yossi Melman, a military expert and commentator for the Israeli daily Haaretz, says that Israel won’t attack Iran unless it has explicit American backing:
“If the U.S. doesn’t approve an Israeli military operation, Israel will not attack Iran. Full stop.”
He also says (and it makes sense to me) that Israel isn’t planning an attack anytime soon:
“The recent leaks to the U.S. news media (New York Times and ABC News) have created a wrong impression and sent a false message that an Israeli attack on Iran is imminent. Far from the truth. No decision to attack Iran has been made in Israel. Certainly no date has been fixed. Israel will decide, if at all, to disrupt Iran’s nuclear program only as a last resort after international diplomacy fails. More importantly, such a decision will be taken only after serious consultation with the American administration.”
There’s a lot of alarmism about the United States, Israel and Iran floating around. I think it’s time to calm down about this. Pay attention, people: barring some unforeseen, and highly unlikely, provocation by Iran, there isn’t going to be any war with Iran. Listen to Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, when he was asked yesterday about attacking Iran. Bogged down in Iraq and stretched to the breaking point in Afghanistan, the military doesn’t want another war. Said Mullen:
“Opening up a third front would be extremely stressful on us … This is a very unstable part of the world, and I don’t need it to be more unstable.”
Crimson Ghost,
The only news from Iran that could help the market is if Iran announced full compliance with UN requirements. They would need to follow the “South Africa Model” or the “Libyan Model” and voluntarily give up their nuclear program. How likely do you think that is?
The Israelis bombed Syria’s nuclear facilities just a few months ago. Why would anybody think that they wouldn’t bomb Iran? It is clearly their policy.
If the Israeli air force headed for Iran, and their submarine fleet took up firing positions, and they sent a message to President Bush saying “Can we attack?” What are Bush’s options? If he says “no”, and the Israelis send back a note saying “please reconsider”, then what would he do? Scramble fighters from our bases in Iraq to stop the Israelis? Could the US air force be confident of winning such a battle? The Israelis are rather sharp…
But the Iranians will be taken out one way or another. In fact, US Special Forces are already in Iran preparing the battlefield just like they did in Iraq long before the invasion.
There is no weakness whatsoever in the oil chart. None. Wishing for Iran to come to its senses, and wishing for oil to drop is not a plan. You can’t make money in the market based upon wishes. You’ve got to come up with something a lot better than this.
Matt
I think Matt is right. Resource exchanges are down. Baltic Dry is down. Commodities in general are down. The markets can see that global growth (and money/credit growth) is rapidly slowing down.
But oil is at 146. The market is starting to believe that Israel will attack Iran.
Matt: Withholding taxes have been surprisingly strong the last 5-6 weeks. Is it a delay in layoffs? Government hiring?
Matt – Guess you’ll be changing the blog motto soon huh… We took SPX 1252.01 out today… Still think we may bounce up for a “few” days now…
Alcoa starts earnings off next week…The weekly charts are not giving much up room though… Jobs number had no real affect today…We’ll see…
Have a nice 4th of July,
visuall
Well the price of oil may be holding up but the XLE has turned down sharply. And the stocks often lead the commodity.
Those betting on a confrontation with Iran and further sharp hikes in oil prices to crash the markets are going to lose that bet IMHO.
Crimson Ghost,
A couple of weeks ago, I wrote “stick a fork in the XLE”. The big institutions are definitely unloading stock there, just like everywhere else. But there has been no effect on the price of oil. Oil is being driven more by the jobs numbers than anything else right now. Iran is less important than you think it is. I still think oil will be the very last thing to crack. Oil will crack the global economy, the stock market will crash, and then oil will follow it down. Waiting for a crack in oil to save the market is the worst investment strategy that I can think of.
Matt
Hi Larry,
All of my ideas about the withholding data are posted on that page. The situation is very bad.
Matt
Hi visuall,
The market moved ahead of the jobs release due to a widely circulated whisper number over 100k. So, the jolt came Wednesday afternoon rather than Thursday morning. Oil also moved up sharply once again just as it did with the June jobs report. The job losses are far worse than anybody is thinking, and are what is really crushing the market.
I’m waiting for the SPX to close below the March intra-day low. It won’t be long.
We haven’t had a lot of pre-announcements, but I think the theme for earnings will be “Not too bad, but terrible guidance.” The market will not like that.
Matt
Matt, i am rather surprised at how strong the BLS NFP figures have been. i think we could rally next week as people make claims that the economy will be ok b/c the jobs data is pretty resilient. however, this assumes oil doesn’t gap higher during the week and people don’t panic over the wknd. holidays such as july 4 bring people together and they discuss how good or bad things are. i have a feeling that most of the discussions will be along the lines of how much it cost to fill the tank, how much food prices increased, where am i cutting back to save money, how much has the house depreciated, etc. I think we are getting very close to that capitulation point where Joe Blow pulls his money out of equities and into cash to save what he has left.
Great blogsite btw!
Hi Tony G,
If you want to go long on the BLS data, save yourself the commissions and just send me your money.
Glad you like the blog.
Matt
Matt,
I’m a relatively new trader and have 1/4 in QID, 1/4 in SKF, and 1/2 in GLD. I am thinking about gradually moving more into QID and SKF and am wondering what you might think of that. Thanks in advance.
Hi Ray,
I have a large QID position and may add to it if the market is able to bounce. I took profits on my SKF and rolled some of the cash into XLF puts, so my position is the same there. I haven’t been trading gold, but I’m guessing it will be OK as the dollar crumbles. I don’t think the S&P will be able to hold the March low for much longer, so I consider any rally to be a gift for shorts.
Matt
Matt, I wouldn’t go long based on BLS (or BS) data, but i can just see the fools on cnbc arguing that things aren’t that bad because jobs aren’t declining at an alarming pace. i just checked to see how many jobs came from the birth/death model and its just ridiculous. the BS model assumes we created about 175k jobs. i took the clip below from one of Mish’s blogs:
Here is the pertinent snip from the BLS on Birth/Death Methodology.
The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations.
Note that the net birth/death figures are not seasonally adjusted, and are applied to not seasonally adjusted monthly employment links to determine the final estimate.
The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend.
Hi Tony G,
Yes, the BLS is simply comical.
While there are some traders who feel relieved by the “good” jobs number, it won’t be enough to spark a substantial rally. After all, on Thursday the SPX could only muster a 1-point advance in the wake of the “good” news. And that 1 point was a gift because the market closed before oil soared in the afternoon.
That move up in oil was no accident either. It is being driven by the jobs numbers more than anything else. Playing on the long side here is very risky.
Matt