Jim Cramer has seen no stronger fury than one of a hedge-fund manager caught with the wrong position. That happened Thursday, when portfolio managers realized they didn't have enough cyclical exposure prompted some dramatic action.
"You want a perfect example of what the heck I'm talking about? Let's talk Alcoa," the "Mad Money" host said.
The stock of the aluminum giant has been in the doghouse for ages. It roared more than 10 percent on Thursday, even though nothing happened to justify the action.
Cramer thinks Alcoa is the perfect metaphor for the market right now. It is a highly undervalued company that has been pulled down by investors' hatred for all things commodities.
I say be careful. These rotational moves are only for the most nimble.Jim Cramer
Additionally, Alcoa will be splitting itself into two companies: one that is a commodity aluminum producer, and another that specializes in the proprietary use of aluminum in trucks, autos and aerospace.
All of a sudden that hatred melted away on Thursday when portfolio managers found themselves too negative on the deep cyclicals. Alcoa and its breakup story fit the bill perfectly, which is why Cramer considers it a buy.
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Why the sudden love for commodities?
Cramer traced it all back to the relationship between commodities and the dollar. The dollar finally weakened against the euro, and that encouraged managers to buy the one thing that always goes up when the dollar goes down — commodities.
"It makes sense because these commodities are priced in dollars, and I have plenty of charts and graphs that show this relationship is both real and investible," Cramer said.
Cramer reminded investors to keep in mind that this is a market with limited participation. That means in order to buy these cyclical stocks, managers will need to sell other stocks. They are now selling the retailers and drug stocks.
"I say be careful. These rotational moves are only for the most nimble, meaning for those who truly believe that they can outrun the bears," Cramer said.
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