Cramer: "Mind the Momentum Sellers"
Enviado: 13/11/2007 16:56"Mind the Momentum Sellers"
By Jim Cramer
RealMoney.com Columnist
11/13/2007 10:54 AM EST
"Momentum sellers, not fundamental sellers, do what they did to Apple (AAPL - commentary - Cramer's Take - Rating), Research In Motion (RIMM - commentary - Cramer's Take - Rating) and Google (GOOG - commentary - Cramer's Take - Rating). No "real" portfolio manager would sell RIMM down after three straight days of pummeling.
But momentum sellers have a lot of powder and they are behind this move. Whole momentum funds were taking action (and I include quant funds in the momentum group) these last few days, and they have been the ones destroying stocks.
How can I be so sure? Because most of these funds were long winners: Apple, Research In Motion, Google, Freeport (FCX - commentary - Cramer's Take - Rating), Transocean (RIG - commentary - Cramer's Take - Rating), Foster Wheeler (FWLT - commentary - Cramer's Take - Rating), and short financials, the mortgage insurers and the banks. They were locking in those gains.
We know what happens when these guys operate. They get irrational, or at least they breed irrational prices. That's what we saw Monday. They are a freight train when they trade together and it took an emergency Fed ease to stop them last time.
That's why I still believe that you have to be careful, and that the oversold condition of the market is likely to protect you for at least a week -- the snap back could be vicious -- and you have to be ready to scale out of these momentum names unless you have an intermediate-term view of several eases.
Momentum funds are difficult to game. How do you know, for example, they won't short their stocks after they are finished selling them? We can't tell.
How do we know when they are finished? Can't tell; it has nothing to do with valuations. I could tell you that Google is cheap on its growth rate, but these guys don't even work like that. They are the hardest buyers and sellers to game of all.
Logically Apple (good for Christmas with the iPhone and iPod), RIM (much less corporate exposure than realized) and Google (still taking the world by storm) should be able to be bought here without much fear after the pasting they have taken. And I smell the snapback, just like you.
I just don't want to tell you that these sellers are done. They are "bigger than the market" and can cause a huge amount of havoc until they are stopped.
So be mindful of their presence -- and I know it's them -- while you attempt to buy today or hold on to beaten-up good names.
At the time of publication, Cramer was long Freeport-McMoRan and Transocean. "
By Jim Cramer
RealMoney.com Columnist
11/13/2007 10:54 AM EST
"Momentum sellers, not fundamental sellers, do what they did to Apple (AAPL - commentary - Cramer's Take - Rating), Research In Motion (RIMM - commentary - Cramer's Take - Rating) and Google (GOOG - commentary - Cramer's Take - Rating). No "real" portfolio manager would sell RIMM down after three straight days of pummeling.
But momentum sellers have a lot of powder and they are behind this move. Whole momentum funds were taking action (and I include quant funds in the momentum group) these last few days, and they have been the ones destroying stocks.
How can I be so sure? Because most of these funds were long winners: Apple, Research In Motion, Google, Freeport (FCX - commentary - Cramer's Take - Rating), Transocean (RIG - commentary - Cramer's Take - Rating), Foster Wheeler (FWLT - commentary - Cramer's Take - Rating), and short financials, the mortgage insurers and the banks. They were locking in those gains.
We know what happens when these guys operate. They get irrational, or at least they breed irrational prices. That's what we saw Monday. They are a freight train when they trade together and it took an emergency Fed ease to stop them last time.
That's why I still believe that you have to be careful, and that the oversold condition of the market is likely to protect you for at least a week -- the snap back could be vicious -- and you have to be ready to scale out of these momentum names unless you have an intermediate-term view of several eases.
Momentum funds are difficult to game. How do you know, for example, they won't short their stocks after they are finished selling them? We can't tell.
How do we know when they are finished? Can't tell; it has nothing to do with valuations. I could tell you that Google is cheap on its growth rate, but these guys don't even work like that. They are the hardest buyers and sellers to game of all.
Logically Apple (good for Christmas with the iPhone and iPod), RIM (much less corporate exposure than realized) and Google (still taking the world by storm) should be able to be bought here without much fear after the pasting they have taken. And I smell the snapback, just like you.
I just don't want to tell you that these sellers are done. They are "bigger than the market" and can cause a huge amount of havoc until they are stopped.
So be mindful of their presence -- and I know it's them -- while you attempt to buy today or hold on to beaten-up good names.
At the time of publication, Cramer was long Freeport-McMoRan and Transocean. "