Econintersect: The notably volatile and bullish Jim Cramer has suddenly become wary. An article posted today (Monday, May 16, 2011) is titled ‘Stocks Due for a Sea Change.’ However, Cramer is not calling for a market collapse. He says that we are going to see a rotation out of sectors that have led the market for much of 2011 and into sectors that have under performed. The recent outperformers have included anticyclicals (recession resistant stocks), while tech, oils, industrials, banks and commodity related stocks have been ‘rolling over.’Noncyclical sectors cited by Cramer include tobaccos, pharmas, medical devices and grain-buying food companies. He also mentions stocks in consumer nondurable companies such as Colgate as having done well in recent weeks.
… if it weren’t for the terrific utility performance I would just say, “Lookout, double dip is here.” I write “if it weren’t for this,” because in the Great Recession we used so little energy that these stocks came totally unglued. Now stocks like Dominion(D_) and FirstEnergy(FE_) — the latter always thought to be a complete dog — are generating techlike performance when the techs used to deliver performance.
Cramer also wrote:
OK, that’s all the bad news. Now let me give you some good news. The pattern has been with this market that when any group, cyclical, non-cyclical, oil, banks, shows up as being overbought the way a Colgate(CL_) or a Merck(MRK_) or ConAgra(CAG_) is, there tends to be a reversion after a couple of weeks of outstanding performance. This is that roving bull market concept I am always talking about.
So Cramer has not really turned bearish. He is simply looking for a bull market somewhere.