Cramer- "Until War, Two-Day Wonders Are the Rule"
Enviado: 14/3/2003 16:53"Until War, Two-Day Wonders Are the Rule"
By James J. Cramer
03/14/2003 09:52 AM EST
"We rallied big Thursday because we won't go to war. We rallied big Thursday because we will go to war.
You can read both of those headlines in the papers today. That bothers me. If you take these headlines for what they are worth, it means that a large cohort of the buyers is wrong. Some major players in the next 72 hours are going to have to change their minds and sell.
That, plus the trifecta of negativity, draws me into the conclusion that this is still one more two-day wonder. What amazes me, though, is how quickly everyone wants to embrace this two-day wonder as something different.
Look, I can't blame anyone for wanting to own. You pick up 8% either way, two-day wonder or exquisite moment, so why not see how it plays out?
But need I remind everyone who has gotten bullish or stayed bullish in the last 24 hours, the pattern's been extraordinarily clear: When we get the VIX at 40, the Chartcraft Investors Intelligence survey number below 40 and the short-term oscillator at -5, you get a two-day rally as shorts have to cover, longs get faked out and bargain hunters come in.
So, take your gains after the second day, make sure you sell positions you are worried about and reposition into stocks that got beat up by the market but didn't deserve it.
How have I played it? Let me give you a snapshot of my Action Alerts PLUS portfolio. I have been picking all the way down on my favorite stocks, and this week was no different -- exquisite moment or not. But Thursday I trimmed my most onerous position, the one I was most worried about, into the delicious strength of the tape. I got out 5 points better than I had hoped to, and I can redeploy that capital into a stock that rallied Thursday but is still way below where I expect it to go.
If I thought this market were the "real deal," then I wouldn't have bothered to sell anything. I would have, in hedge-fund lingo, "needed the exposure too badly." I couldn't have risked selling if that were the case.
Given the pattern that's been so clear for the last two years -- down down down down down until we are oversold and negative, followed by 200 points up, then a pause and then a 200-point up over one or a couple of days, followed by disaster -- it is amazing to me that we think we can overlay the pattern on a war rally if not everyone who bought thinks there will be a war.
I have pondered this endlessly in the last 24 hours because, as you can imagine, I have been bombarded by people who have been telling me I'm splitting hairs and that this is it, this time. Given that I don't even know myself whether we are going to war in the next 10 days or not, I think the onus is on the bulls to figure it out, not the bears.
Every time I have been too early in betting the war was about to begin -- and I have been wrong twice about the timing -- it has cost me mightily. Forgive me for wanting not to lose a third time, especially given the knowledge that the window of war remains open until the first week of April. Remember, that's a veritable lifetime in this market. Every one of the two-day wonders has taken less than a week to unfold. The prospect of buying big now ahead of what could await us a week from now, a big selloff on expiration week exacerbated by put-buying, is simply too daunting even for the person looking for an exquisite moment scenario.
Chicken? How about, unwilling to be a barbecued chicken? "
(in www.realmoney.com)
By James J. Cramer
03/14/2003 09:52 AM EST
"We rallied big Thursday because we won't go to war. We rallied big Thursday because we will go to war.
You can read both of those headlines in the papers today. That bothers me. If you take these headlines for what they are worth, it means that a large cohort of the buyers is wrong. Some major players in the next 72 hours are going to have to change their minds and sell.
That, plus the trifecta of negativity, draws me into the conclusion that this is still one more two-day wonder. What amazes me, though, is how quickly everyone wants to embrace this two-day wonder as something different.
Look, I can't blame anyone for wanting to own. You pick up 8% either way, two-day wonder or exquisite moment, so why not see how it plays out?
But need I remind everyone who has gotten bullish or stayed bullish in the last 24 hours, the pattern's been extraordinarily clear: When we get the VIX at 40, the Chartcraft Investors Intelligence survey number below 40 and the short-term oscillator at -5, you get a two-day rally as shorts have to cover, longs get faked out and bargain hunters come in.
So, take your gains after the second day, make sure you sell positions you are worried about and reposition into stocks that got beat up by the market but didn't deserve it.
How have I played it? Let me give you a snapshot of my Action Alerts PLUS portfolio. I have been picking all the way down on my favorite stocks, and this week was no different -- exquisite moment or not. But Thursday I trimmed my most onerous position, the one I was most worried about, into the delicious strength of the tape. I got out 5 points better than I had hoped to, and I can redeploy that capital into a stock that rallied Thursday but is still way below where I expect it to go.
If I thought this market were the "real deal," then I wouldn't have bothered to sell anything. I would have, in hedge-fund lingo, "needed the exposure too badly." I couldn't have risked selling if that were the case.
Given the pattern that's been so clear for the last two years -- down down down down down until we are oversold and negative, followed by 200 points up, then a pause and then a 200-point up over one or a couple of days, followed by disaster -- it is amazing to me that we think we can overlay the pattern on a war rally if not everyone who bought thinks there will be a war.
I have pondered this endlessly in the last 24 hours because, as you can imagine, I have been bombarded by people who have been telling me I'm splitting hairs and that this is it, this time. Given that I don't even know myself whether we are going to war in the next 10 days or not, I think the onus is on the bulls to figure it out, not the bears.
Every time I have been too early in betting the war was about to begin -- and I have been wrong twice about the timing -- it has cost me mightily. Forgive me for wanting not to lose a third time, especially given the knowledge that the window of war remains open until the first week of April. Remember, that's a veritable lifetime in this market. Every one of the two-day wonders has taken less than a week to unfold. The prospect of buying big now ahead of what could await us a week from now, a big selloff on expiration week exacerbated by put-buying, is simply too daunting even for the person looking for an exquisite moment scenario.
Chicken? How about, unwilling to be a barbecued chicken? "
(in www.realmoney.com)