Four days after I questioned whether or not the S&P 500 could break-out without the participation of the financial sector, Jim Cramer has weighed-in on the subject.
Cramer’s theme for today is that the financials don’t matter any more. That they have shrunk from 20% of the S&P 500 to 11%. Cramer is also proposing that the energy sector may be able to take over leadership, and that $120 oil might be a good thing.
Clearly, Cramer is trying to make lemonade from lemons here. One day, the USA will be a huge producer of green energy technology, perhaps driven by scarce oil. But can this be a market mover right now?
The bull thesis is falling apart fast here. The bulls are counting on the government to save the economy with tax rebates and interest-rate cuts. But now people are going to have to use most of their rebate to pay for higher oil and food prices, and we have had testimony from a Fed Head yesterday saying that the interest-rate cuts are not working.
Now the bulls, led by Jim Cramer, are reduced to saying that soaring oil prices will actually be the catalyst that will drive the market higher here. Seems crazy to me…
Disclosure: I made some money shorting the S&P 500 after Friday’s big rally, but I have no position at all right now. I am 100% in cash.
