Don't Mess With the Bull; You'll Get the Horns
By James J. Cramer
06/03/2003 07:55 AM EDT
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Short-sellers, don't read this article. It will be too depressing for you.
Monday's action represented classic bull market activity. The market started off red-hot simply because nothing bad happened over the weekend and lots of money came in.
Just like the old days, some of the bigger mutual fund families came in and bought futures to be sure they were invested enough vs. the over-the-transom money. Quite a switch from the days when they had to sell futures to equal the outflows.
The public bought in, too, heavily encouraged by weekend national news reports about potential cancer cures. The dumb money that had not known about Avastin took Genentech (DNA:NYSE - news - commentary - research - analysis) up six points. Oh man, how '90s was that?
Traders came in on top of this activity, not to fade the buyers, but to pile on, sensing that a rotation into the big industrials might be afoot. By midafternoon things got too hot and the Nazz cooled -- perhaps because of expectations that Intel (INTC:Nasdaq - news - commentary - research - analysis) couldn't deliver later in the week, perhaps because of a sense that the winners of the previous month had been a tad too marked up and were unsupportable.
That led to a Nazz rout, which swept into the Big Board. But given that there was real money going into the industrials and the Nazz action was simply heightened by a series of combos put on by hedge funds to accelerate the downside, the losses weren't stupendous. We didn't get a total reversal in the Dow, so the damage was incomplete.
If you search the textbook you will find ample days like Monday in the mid-'90s, during the great run-up in the averages. They are bullish days with bearish tinges. They tend to be followed, initially, by profit-takers in the overseas markets and sellers in our markets who feel they could lose some hefty gains.
And then, barring unforeseen blowups, the upward trend resumes.
Random musings: Monday I heard from the usual number of hedge funds that thought I was picking on them for underperforming the Nazz. Hoo-hah, I'm just a mean client writ large! I wasn't picking on anyone. ... I'm going to journey to the Hewlett-Packard (HPQ:NYSE - news - commentary - research - analysis) lovefest down the block this morning. Tomorrow morning I am journeying to the elementary school to help run Field Day; I like that much more. ... Bears might get aided by the threatening zone that Bush is entering into these next few days. I, for one, will feel better when he's out of there. ... If you don't believe me that FCC Chief Michael Powell had to lean this way, you haven't been to law school or read any of the cases. Powell works for the D.C. Court of Appeals, and they're calling the real shots here. |
