Bill Cara: The Cramer legacy, Wed., Oct. 26, 2005, 3:16 PM

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October 26, 2005

The Cramer legacy, Wed., Oct. 26, 2005, 3:16 PM

Other than putting on his clown costume daily and honking his horns and buzzing his buzzers, what has Jim Cramer done to deserve a cover story in Business Week? Yes, it is true that McGraw-Hill, the publisher of Business Week, makes the odd mistake, but they also own the credible Standard & Poor's Rating Service. So maybe they'll follow up with a rating on Cramer.

From what I can see, if Cramer says Buy", the clear winner is to Sell". In fact, if you recall, I took that position earlier this year with a couple of his beauties. Do you remember his call to sell the oils on May 16? I used it to make my call to buy them.

Then he made a call to buy Constellation Brands (NYSE: STZ). He made it repeatedly, so I used his hype to short STZ, and just to make it interesting, to give you a paired hedge trade with a Buy" on Diageo (NYSE: DEO). Yes, Jim, mine went up, and yours went where they all too often go " down the toilet.

So here's the Constellation Brand that Cramer was pushing through the high 50's into the 60's, before the split. It soon fell from over 30 to under 22. But I'll let the owners of STZ tell JJC what they think of that one.

And do you recall how he and his former sidekick were so gushing over Yellow Roadway (NDQ: YELL)? They couldn't get you to buy enough of that one.

So what happened Jim? YELL was driven from the 60's to 42.

But my favorite is the Sears Holdings (NDQ: SHLD), which Cramer hyped all the way to above $160 before it crapped out in two months to below $120.

For a serious trader, Jim, these are serious hits to take. But I guess you wouldn't know about that. Because you can say you are just a clown.

Yes Jim we get it. But why didn't McGraw-Hill get it?

And no Jim, it's not just the business" " unless you're giving us the business.

Speaking of the rear-end of a horse, Jim has been a one-trick pony. Yes, his GOOG worked out in spades. It's just the rest of his deck seems to be missing.

Posted by Posted by Bill Cara on October 26, 2005 03:17:03 PM | Category: Cara Dubious Feat Awards , Cara Today in the Market

Discourse

Bill,

I'm glad you liked the Abby Joseph Cohen chart, sorry it wasn't clearer.

Regarding your ambition to be a teacher vs. a forecaster, you like "ka-ching!" too much to stop forecasting totally and without it, your lessons wouldn't be heard. Besides, you are great at what you do and should put Cramer out of business.

Here is a suggestion; I don't know legal or time constraints, but why don't you have a section on reader "thoughts" (not recommendations) on trading ideas that use your teachings. I'll give you an example based on your earlier writeup today.

Using Value Line October 21st 2005:

Pfizer currently is trading at $21.10 with a dividend yield of 3.6%.
Value Line has an average annual P/E ratio of 18 and a 2006 EPS Est. of $2.20 for a target price of $39.60. That would be a gain of 87.7% plus a dividend yield over the next 12 months of 3.6% equaling a TRO of 91.3%.

Bill's RSI accumulation zone is under 30.
Monthly RSI (14) is 28.6,
Weekly RSI (14) is 23.6,
Daily RSI (14) is 17.8,
60 Min RSI (14) is 31.8 and trending higher (7 over 14 over 21).

Value Line states that the biggest risks are "patent related anxiety", but the the recent win in England increases Value Line's confidence that PFE will win patent battle in US. VL also gives PFE an A++ for Financial Strength and 100 for Earnings Predictability.

The stock has fallen very far and currently seems to be supported at the 1997 and 1998 breakout of $21. I like to use trendlines and Fibonacci as supports on Weekly and Daily charts, so my comfort level is not that great here, but if PFE rallies and fills the recent gap down, that's a 10% gain in itself.

I will be looking for two things to happen and I will then purchase PFE. A thorough trashing by CNBC or an upside break of the downtrend line which would bring a positive daily RSI. Now that I think about it, a thorough trashing of PFE on CNBC will be like the Jim Cramer trashing of MRK about 1 year ago which led to a MRK rally through the downtrend line and a quick profit of over 20% (as I recall).

Sure there are risks, but that's what diversification is for, or put writing.

So if others out there would be interested in posting trading "thoughts" based on sound analysis, let's see if Bill is interested in hearing from his students.

g034

Posted by: g034 at October 26, 2005 6:32 PM [link]