Jim Cramer’s “Mad Money”
Cramer was heartened by Merrill’s decision to sell its “bad bonds and collateralized debt obligations.” He said the moves could pave the way for other financially plagued institutions such as Citigroup (C), Wachovia (WB) and Washington Mutual (WM), as it offers them a model for “what they have to do to save themselves.” The second item that ignited a 266.48-point rally in the DJIA was the “remarkably great earnings” of Colgate Palmolive (CL) and US Steel (X). Their results, he said, are “a sign that market wants to rally.” The third item is the collapse of oil prices. He said a fall of oil prices to $110 would drop gas prices to $3.50 a gallon. Cramer said the rally is not over if the the federal government issues a decent employment numbers on Friday. Then, Cramer placed Merrill’s CEO John Thain on his “Wall of Shame”, as he has “over-promised and under-delivered.” Next, the contention of Core Laboratories’ (CLB) CEO David Demshur, is that the stock should not be falling along with oil and gas prices. Demshur maintains his company should do well as long as oil stays above $70 and natural gas is above $6. He said the demand for its services is “inelastic.” Moreover, Demshur said the company has guided for record revenue and profits for Q3 and FY08. Cramer also focused on Kimberly-Clark (KMB), a classic defensive play, but one hurt because of the price of oil. For every $1 in the average price of oil increases, KMB’s annual earnings lose a penny. And for every $1 increase in natural gas, KMB’s annual earnings lose 4c. But Cramer says KMB is in a position to turn things around as the company’s conservative guidance, a possible price increase and the downward trend in oil and gas prices will help. MAD MAIL: AT&T (T) analysts too negative on the stock, but Cramer says its cheap and he likes the dividend. For that matter, he also likes Verizon (VZ) and predicts both stocks will be much higher at year’s end. Lastly, Cramer expressed his dislike again of ethanol mandate, and that it should be scrapped. LIGHTNING ROUND: (Bullish) ABB; RIG. (Bearish) GRMN; GE; HBAN; IPI; POT; AUTH.

Fast Money position recap: First Moves: Jeff says take profits on XLF, Guy likes USB, Karen likes shorting IYR, Pete likes WFC.
Macke Owns (DIS), (MSFT), (WMT), (COST); Adami Owns (GS), ( C), (NUE), (MSFT), (AGU), (INTC), (BTU); Adami’s Wife Works At Schering-Plough; Najarian Owns (TSO); Najarian Owns (WMT) Calls, (XLY) Calls; Najarian Owns (AAPL) Puts and stock; Finerman And Finerman’s Firm Owns C; Finerman’s Firm Owns (MRK), (GS), (VLO), (TSO), (MSFT), (SUN).

(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)

Big market rally caught the shorts by surprise and it looks to follow through today off the good jobs number and so far a slight drop in oil this morning. If the oil inventories come in above expectations and oil prices drop again, the market will rally again. I will have my eye on my Optiondragon LIB (Leading Indicator Basket)= UUP+USO+XLF+GS(brokers)+FNM for clues to market direction. The magic number is for the market to break S&P500 1290 and use that level as support. That could draw in more buyers and form a stronger bottom. The biggest question to ask is, “Was all the supply taken out during the recent market drop?” I mean every weak long sold a long time ago and the naked shorting can only persist up to a point. This I why i have been advocating just like Jon Najarian, that the SEC SHOULD institute the short sale rule on all stocks. The short attacks have been created with phantom stock. A company employing tens of thousands of people with real lives and real families are being driven into the ground from uncovered naked shorting. It is must easier to institue fear in the markets than hope. Let these short hedge funds and all shorts abide by the rules of the market by borrowing first instead of phantom shorting. You know why they whine? Because its easy money thats why. Its a layup versus a mid range jump shot. There are companies that have more short interest outstanding than their entire float. What is wrong with that? Theorically you can short drive a WAMU right to zero without borrowing one share to sell. It just doesn’t seem right. Pick plays with a high probability of success, plan the trade and trade the plan, have focus and patience, run technicals through supply and demand. Great Luck and HappyTrading!