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Imminent Rate Cut? - Cramer's Stop Trading! (10/3/08)

by: SA Editor Joan Wickham October 03, 2008 | about stocks: IMCL / JCP / KO / LLY / M / MCD / SGP    

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Joan Wickham

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Recap of Jim Cramer's comments on Stop Trading! Friday October 3.

Predicting a Fed Rate Cut - Coca-Cola (KO), McDonald’s (MCD) and Schering-Plough (SGP)

The market is so “completely exhausted” after this past week, Cramer said that it’s “falling on its own weight.” The Dow was down about 20 points with just a half-hour left in trading, and many on Wall Street seem to have already shifted their attention to problems other than the House’s passing a $700 billion bailout bill, such as falling employment numbers. Coca-Cola, McDonald’s and Schering-Plough "are just unbelievable bellwethers of what the Fed's going to do," said Cramer. "These are stocks that go up when you think that the Fed is not going to do anything," he said. "These are trading down as if there's going to be an imminent rate cut by the time I'm done with Stop Trading!" Someone somewhere might be expecting a cut then, Cramer said, if not here in the U.S., then overseas.

In the Crosshairs - Macy's (M) and JC Penney (JCP)

The SEC won't let the shorts target financials stocks, so Cramer said the next victims could be the retailers. He predicts the move to stocks such as Macy's and JC Penney because the short-sellers "are kind of bored right now. They've taken everything else apart." Rumoring down companies like Macy’s and J.C. Penney wouldn’t be too hard as the holidays approach and credit is tight.

Big Pharma Desperate – Eli Lilly (LLY), ImClone (IMCL)

Addressing reports that Eli Lilly is looking to buy ImClone, Cramer was surprised by Eli Lilly’s move for ImClone. “These big pharma companies are so desperate that you have to believe that every biotech stock could be a target here,” Cramer said, “because ImClone’s one of the worst and Lilly’s after it.”

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This article has 4 comments:

  •  
    Oct 03 11:45 PM
    I don't short stock but I do sometimes buy put options.........but I think this short sale ban is a joke.....It will not help these companies from going down......a short is a future commitment to buy the stock. Is their even any proof that shorting causes stocks to go down.....I know that it can force it to go up during a short squeeze. People have the right to short just as they have the right to go long!
    Reply
  •  
    Oct 04 09:44 AM
    Back in 1920s, some people took a stock market investment advice from a local shoeshine boy. These people lost a lot of money but I don't feel sorry for them. They got exactly what they paid for.

    Now, we have Jim Cramer, a clown, whose financial advice quality is not much better than from an old-good shoeshine boy. Well, the consequences will be just the same.

    History tends to repeat itself...
    Reply
  •  
    Oct 04 01:46 PM
    People may have the "right" to sell short as well as to sell long - although that is an interesting choice of words - but if you cannot appreciate the potential /probable harm to an economy that comes from driving a stock or company into the ground, I don't really know how to reply. Yes the exagerated momentum that results from excessive long positions does tend to inflate a companies stock unreasonably. But normal market response tends to temper that. The harm from driving a stock up is not an equal measure of driving it down. The latter creates panic, and the result of panic is not an equivalent to the result of unreasonable euphoria.
    Reply
  •  
    Oct 04 03:41 PM
    Why in God's name do we permit the premeditated destruction of an American company by hedge fund thugs who use innuendo, rumors, story plants, manipulation, and outright thievery to line their pockets?

    Picture these guys in their double breasted pin-stripped suits sitting over a plate of beef tartar, overly white teeth and pudgy cheeks plotting the demise of a great company like Apple. Only in America and only in a country that still does not get it that unless you put these thugs out of business once and for all, our country will suffer. The hedge fund mafia will kill the goose that laid the golden egg.
    Reply
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