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Cramer: Stay Bullish on Tech, Oils & Banks

Thursday, 7 May 2009 | 7:16 PM ET
Root Of All Evil
A view on the markets and bank stress tests, with Mad Money host Jim Cramer.

Don’t despair just because the Dow, Nasdaq and S&P 500 pulled back on Thursday, Cramer said. Don’t let short sellers, bears and other otherwise negative Wall Street analyst tell you that this is the beginning of a long trip back down to Dow 6,500 – or worse. It is not. Today’s action was merely a natural pullback after a two-month rally in stocks. So bide your time, look for discounts and get ready for the bulls’ return.

Big advances followed by sharp pullbacks – that’s how bull markets work, Cramer said. A 5% to 10% decline is to be expected after the major moves we saw in JPMorgan Chase and Goldman Sachs. And the same goes for tech. The Nasdaq has jumped 11% since its recent bottom. Would you expect that to continue uninterrupted? Of course not. And don’t be surprised by the dip in oil, either, especially when a barrel of crude has risen $20 in a straight line.

Cramer was adamant today that investors not sell bank stocks, not when they are just about to move higher. Nationalization is no longer an issue, balance sheets are looking better, net interest margins are on the rise, and the Treasury Department’s stress tests have actually done more to help the sector than harm it. The banks are buys right now, whether they need to raise capital or not. Goldman Sachs? Buy. New equity offerings from Morgan Stanley and Wells Fargo ? Both are buys.

Cramer did offer one cautionary note, though. Wait for a pullback of 5% to 10% on any stocks with big gains. But again, that kind of decline is typical of a bull market.

A couple of other points worth mentioning as well: The first phase of the bull run is over, and the next group of companies to move higher will be, not just those that survived the depression that ended in March, but also those that thrive during the recession we’re in right now. Also, there are more money managers and retail investors who want in this market than out, particularly the bank stocks. So buy those equity offerings – everyone else will.

Cramer thinks the pullback will play out with short sellers adding to their positions just as the market approaches his predicted 5% to 10% decline level. As we said, they will think this is the beginning of another downturn. But at the same time, the bulls will be looking to get back in at that level. And the wave of buying – in tech, the oils and banks – should turn the market right back up.

Cramer's charitable trust owns Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.

Call Cramer: 1-800-743-CBNC

Questions for Cramer? madmoney@cnbc.com

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