Wrong! Dispatches from the Front:
Cramer Says Oracle Volume Speaks
Loudly
By James J. Cramer
12/10/97 8:13 AM ET
Volume speaks volumes. And what happened Tuesday to
Oracle smashed the decibel meter.
As large capitalization funds scrambled to jettison Oracle
before it became a midcap, the feverish pitch to the trading
told me this was no ordinary disappointment. When you get
150 million shares trading in a stock, you must be on alert
to a seachange. Maybe institutions just want to get out of
Oracle. But maybe they simply want out of tech altogether,
and Oracle was but a symptom of this change.
Let me explain. Most of the tech blow-ups we see involve
traders hitting the road after a disappointment. Very rarely
do the giant-sized institutions bolt for the exit ramp that fast.
They like to do things calmly, in meetings, after lots of
debates and tire-kicking, In fact, the giant-sized institutions
typically BUY, not sell, these disappointments, using the
heavy volume to build a huge position. (And yes, there were
obviously buyers of ORCL Tuesday, but that's not the point).
Big institutions don't dump like this unless they are scared,
scared that a new trend might be in place and they can't
hesitate while fleeing. Normally they are willing to ride things
out betting it is a short-term glitch.
Tuesday the big money bolted, both in Oracle and in tech in
general. Tuesday felt different from previous sell-offs. At one
point I heard a commentator rambling on CNBC-Dow Jones
about how Oracle would probably bounce right back. But the
commentator will be Wrong. This Oracle collapse reminds
me very much of the giant MCIC collapse that occurred 14
years ago. Massive volume, huge chunks falling like so
many icebergs melting into the Arctic. It took years for MCIC
to come back. It will take years for Oracle to come back,
too.
My question is will people see Oracle for what I saw it: a
global slowdown hurting almost all tech? Or will they see it
the way my e-mail box read: Ellison's a big jerk, this has
nothing to do with tech, the problems are Oracle specific, it
doesn't involve personal computers, etc. etc.
Had I not been on the conference call I might have thought
the latter. And if I were big long tech and "lugging" -- Wall
Street slang for being buried alive under a mountain of bad
stocks -- I think I would have trashed Cramer, too. When you
are long and wrong you tend to get a little over-the-top when
someone speaks the truth against you. I know; I've been
there, screaming at my own wife, when we used to trade
together, about how nothing has changed, the sellers are all
wrong, they don't know what they are doing. I was never, I
repeat, never right when I showed that level of emotion.
But I think the record-breaking volume on this "core-holding
in tech" shows that the big guys are in my camp. They want
out of their overweighted tech positions. They are nervous.
They want more safety, more non-tech S&P 500 stocks.
They want into the drugs and foods. And the bonds. They
want no risk between here and yearend. And unless you are
in a tech stock that will be supported to help someone's
performance, I don't expect a v-shaped turn in the group.
Not with that kind of exit volume.
Some of you e-mailed me expressing that I had been a
turncoat, one even referred to Benedict Arnold. What a
shame. I am not a theologian of this business. Nor am I
Elmer Gantry. I am simply exercising my right to recognize
that the facts have changed. I am exercising my right to hear
and see what sources are telling me. That's what good
trading AND good investing is all about. Don't begrudge me
my flexibility. Where is it written that tech must always go
up? Those of us who traded from 1983 to 1989 know better.
Learn from us; don't scorn us.
**************
Random Musings: Tuesday was one of those days when I
missed my old job at Goldman Sachs. They were trading
up a storm in Oracle and I always loved theatrics of the
traders on these big down ugly days. I could just about hear
in my head: "We are expanding the volume on Oracle. And
we are trading 2 million Oracle, open small on the buyside."
Gotta love caveat emptor Nasdaq block trading.
James J. Cramer is manager of a hedge fund and
co-chairman of TheStreet.com. Under no circumstances
does the information in this column represent a
recommendation to buy or sell stocks. Mr. Cramer's writings
provide insights into the dynamics of money management
and are not a solicitation for transactions. While he cannot
provide investment advice or recommendations, he
welcomes your feedback, emailed to Jjc@Jjcramerco.com.
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