Momentum stocks seem to have cooled for the moment, Cramer said during Wednesday’s Stop Trading!.
The Mad Money host is seeing the big money move into supermarket and drugstore plays – areas usually sought out during a recession. Procter & Gamble , Coca-Cola , Pepsico and Bristol-Myers Squibb are all up today.
“These are all just giant sector rotations,” Cramer said. “It is not individual stocks.”
Where’s the money coming from? Coal stocks for one. The group is among the biggest losers on the S&P right now. Since the U.S. exports its coal, factors like the European Central Bank possibly raising rates, lower prices in South America and Europe, and therefore lower earnings for U.S. companies, could all lead to a loss in momentum.
But Cramer did say that coal stocks, much like those of fertilizer and steelmakers, usually take their hits at the end of a sell-off. So the decline isn’t the start of a correction in what people have been saying is a commodities bubble.
The “momentum comes out of there,” Cramer said of these three groups, “they come down, then they recharge.”
During Stop Trading!, news came over the wires that Lehman Brothers will issue stock as a way to retain key employees. Cramer said the move made sense for a company that’s not doing well and needs to hold onto talent. He didn’t see it as proof one way or another that Lehman will sell itself.
All week on Mad Money, Cramer’s been highlighting health-care stocks, but today he urged investors to stay away from Unitedhealth, saying, “This thing is extremely overvalued, and you have to sell it.”
Retail is “horrible,” Cramer said. Costco and TJX remain among the few stocks in that sector he’ll recommend.
“We're in bad shape in the [U.S.] right now,” Cramer said, “and the stocks are reflecting that.”
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