Boy, it was fun to watch. This morning Jim Cramer finally imploded after he suggested that executives at the bond rating agencies and Wall Street investment banks were "Country Club" buddies, and were hiding material financial facts due to their friendships.
Cramer's Wall Street tongue lashing was so revealing that CNBC chose not break for a commercial for several minutes. I have often referred to CNBC as the financial commercial channel, so when they didn't go to their usual break after 5 minutes, I knew what Cramer was saying was profound.
He also said that if it wasn't for the "Terrorist" (Arabs), and the "Communists" (China) adding capital to companies like Merrill Lynch and CitiGroup, both firms would be bankrupt.
Folks, it was only a matter of time before Cramer imploded. Like Colonial Nathan R. Jessup from the movie a "Few Good Men", Cramer has wanted to tell the truth about Wall Street for a very long time. He has covered their asses, and held his tongue for so long, that he finally couldn't handle it any longer.
"You need me on that Wall (Street), You want me on that Wall (Street)"
Video of Cramer’s Interview on CNBC this morning.
My guess is Cramer's sudden boldness was trigger by an interview with Donald Trump which will air on Mad Money today.
While Cramer's Mad Money is entertaining, you have to be careful with Jim's recommendations. He is obviously a momentum trader, but when you mix momentum with traits of being ADHD (Attention-Deficit Hyperactivity Disorder), you are dealing with a dangerous combination.
I've been telling you for quite sometime to be very careful with Wall Street. Why anyone in there right mind would house their investment accounts with these people is beyond my comprehension.
In addition, be careful with what you are told by the media. The media is often used by Wall Street as a tool to tout whatever it is they want to sell. If you want some in-depth proof of this, read Running Money and Wall Street Meat by Andy Kessler.
Here is a quote by Mark Twain that you should always keep in the back of your mind;
"If you don't read the newspaper you are uninformed, if you do read the newspaper
you are misinformed."
The Markets
Yesterday was another volatile session.
Intel closed down 2.80 to 19.88 after the company announced that revenues will miss analyst estimates. the company also said that 2008 does not look good.
JPMorgan (JPM: + 2.26 to 41.43) missed forecasts, but sub-prime write-downs were less than expected.
Wells Fargo was up (WFC: +.88 to 27.37) after reporting profits that beat forecasts.
Oil dropped sharply on recession fears, and after the Department of Energy reported a larger than expected build in inventories.
A recession remains the most likely scenario. I believed we have been in recession for 6 months, but I guess investors want to wait for the official notice. By time we get confirmation, we will be on the road to recovery.
Corporate earnings estimates continue to come down.
This morning, Fed Chairman Bernanke will be speaking on Capitol Hill. I think it is obvious that the Fed will continue to cut interest rates, and a fiscal stimulus policy is likely to be introduced.
The support level on the S&P 500 is around 1370. I think that area will be violated, and a downside target of 1270-1250 may be next.
In 2007, the Dow Jones Industrial Average hit a 52 week high of 14,166 on October 9th. As far as potential entry points are concerned, we look to see where the Dow and the NASDAQ would be at declines of 10%, 15%, 20%, and 25%. The following percentage declines would put the DJIA and the NASDAQ at these levels.
Declines from 14,166:
10%= DJIA 12,749
15%= DJIA 12,041
20%= DJIA 11,332
25%= DJIA 10,624
A 10% correction is considered a normal pullback in a bull market. During bear markets, or periods of economic recession, one can expect declines of 20-40%. Since I believe we have transitioned from a bull market to a bear market, I would not be surprised to see the major market indexes fall within the range of prior bear market declines.
Have a nice day!
