Freddie Mac & Fannie Mae are “technically insolvent – and everybody knows it”. Cramer recommends staying away from financials.
Shouldn’t one stay away from stocks entirely, then? Doesn’t a shoe dropping affect more than just the financial sector? Not really. The market is unprepared for a failure of a Freddie or Fannie, but pockets of the market remain strong.
Mad Money has been focusing on some of these stocks – Smith & Nephew (on last night), and Genentech is trading up even after a NYT hit job on drug pricing.
Oil & gas are trading down – bringing down the market with Fannie & Freddie. “We don’t want oil to be down huge, because there’s too much of the S&P that’s now oil, and too much is the financial.” People playing with stocks like Ambac and MBI with real money are met with derision.
A market expecting a 16% increase in tech company earnings will surely be disappointed. Cisco and Seagate are at new lows. Post-Bear Stearns, a lot of people bought tech, but Oracle is in a house of pain since they reported quarterly earnings – there’s not a lot of good news coming out of tech. “Sell in May, go away”, an aphorism seldom used by Cramer, has never been truer. It could be a major mistake to try to seek bottom-fishing bargains in tech.
CVS (not to be confused with “horrible stock” CBS ), in the wake of a negative Rite Aid report, is looking like one of the few retail stocks Cramer likes.
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