[Beginning of Cramer's verbatim comments for this segment...]

Jim:           This is not a market that makes sense from what is known as the top down… it makes no sense if you listen to the guys who have the big picture… who pour over the gross domestic numbers… the employment numbers… the national retail sales numbers… they think our economy, and therefore our stock market, are simply pumped up steroidal affairs… or maybe just supplements like the case of Mannie Rameriz, David Otiz… case in point, noble prize winner and New York columnist Paul Krugman… who this morning, shocking… took the Great Depression II off of the table… we did that 2500 Dow points ago for the record… well, said all that is happening we are just getting worse more slowly… Krugman like so many others I hear say that it is all government spending that is providing any of the rally… any of the economies pumped… and it is providing… and without it, well, let’s just say that we would be post steroidal weakness...

That is right they think that without all of this Federal money… turn it off… we deflate faster than a popped helium balloon… are things getting worse, really… are things really getting worse like that… slowly… is that what happened… does the Krugman view of the intelligentsia view really hold water… given the stock markets rally… is the rally chimerical… or is the economy actually getting better… not declining less quickly… of course, the Kruman thesis would justify today’s 32 point decline in the Dow… the 3 point decline in the S&P… but I am not buying it… not one bit… I think things are actually getting better… straight out… with or without the government… but you would only know it if you looked… not top down… but bottoms up… meaning only if you got your fingers dirty listening to the conference calls, reading the research, going thru the press releases line by line, getting on the website to see individual companies presentations… you have to google the executives… the CEOS… find out what they are saying… where they are saying it… including on this show… and you will reach a very different conclusion than what the big think guys will give you.

If you listen to the top down dons… and I mean academic not mafia… because Tony Soprano was always a bottoms up guy… you will hear the negative litany… commercial real estate crash coming… overextended consumer… except when she is saving too much… government spending the only game in town… debt burden to weigh on stocks… I love that, it is like a generic DA probe rackets… I think all of the people who are fretting about this stuff are just too far removed from what is actually happening… that is the problem with focusing on the macro over the micro… these Krugman’s, these academics and muckity muck strategists… they are like Westie, General West Moreland, not talking to the grunts in Vietnam.. or Rawlinson in Sir Douglas Hay, "chateauing" it up as their men get cut down by thousands advancing against infallating machine gun fire… worse… they could be Rumsfeld.

Now, I am not a top down guy… not at all… I like to do what is called bottoms up analysis… I make judgments from the ground floor, from the trenches… where I think that you get a much more accurate depiction of what is going on… and here is what is really happening… we are not getting worse more slowly… we are actually getting better… maybe much better… and it isn’t all government spending… that is ridiculous… most of the stimulus hasn’t even hit this country… the government is not buying all of those handbags at Coach… it is not spending $400 to buy jeans at True Religion… or all that foo foo stuff at Anthropolgy… or hot selling boots at Joan’s Aparral… the government is not shopping at the new JCPenny store in Manhattan, which is well above plan.. I think when these retailers report this week… you are going to hear what I have just been saying… inventories are lean… business is better than expected… back to school season… it is on.

The government is not buying all of these Apple iPods, or iPhones… or any other smart phones with stuff from ON Semiconductor Corp. (ONNN), and Tellabs Inc. (TLAB), and Cree (CREE), and Skyworks Solutions Inc. (SWKS)… Motorola Inc. (MOT) is at $7 because of demand… not from Congress… Cisco (CSCO*) did not just make up that it saw its first order spurt in a year… it did not just dream it up to pump up its stock for heavens sake… the turn is real… you do not get rallies in Alcoa, Inc. (AA) and International Paper (IP) without aluminum and paper getting stronger on their own violation… steel price increases are not all from China… that is ridiculous… and while oil is up, well let’s say too much since the bottom… it did not deserve to be at $40... anymore than it deserved to be at $140... because we were never as weak as the $40 indicates… and never as strong as the $140 would tell you.

Ford is not at $7 because of cash for clunkers, instead of $4... it was there before that because the turn had already happened… sure cash for clunkers is a little like throwing acetylene on an already burning campfire… but make no mistake about it, the fire was burning… you can’t just explain that strength away… the banks have not rallied 30%, 40%, or 50% for no reason… they have gone from teetering beemus to sturdy earners… and I do not think anything on the horizon, including the so called pending collapse of commercial real estate that I keep hearing about… can sink them.

Before banks can be taken down by commercial real estate… they will be parceled out by the FDIC to the winners… and we know which ones those are… I am talking about the First Niagara (FNFG), I am talking about the FirstMerit Corp. (FMER)… you know that… if everything was propped up by the government, then how come State Street Corp. (STT) only dropped a buck and a half today after it said that it needed more capital to cover sub prime loss claims?… It could issue 10 million shares right now… pay them.

Look, if you take the top down Mac review… you can not even see the strength… so what is the real bottom up picture… the consumer is not strapped, just frugal… not a problem… it is kind of what we always wanted… commercial real estate is dealable, containable… the new card bill… well, slightly borrowed because of cash for clunkers… is returning to a lower level… but with somewhat normal demand that exceeds inventory… even without the program… with all of that I have to ask… why shouldn’t the market have gone up… the big move higher may be stalling out right now… but it has always been justified by a getting better than expected attitude… which is much rosier than a getting worse less slowly nonsense that you hear from the top down guys, the ivory tower academics, and yes, the media.

Here is the bottom line…

▼   ▼   ▼   ▼   ▼

The Bottom Line!:     The only way to make sense of this market is by looking at it bottoms up… not top down… remember, if you listen to the top down guys you are thrilled that you missed the 45% rally off of the bottom in March… because that rally was way too risky to be involved in… if you listen to the companies though, you would feel like a total chump if you sat it out… as you let the generals tell you what you saw, instead of using your own eyes and ears… and if you listen to me, got in on the action… you can sell tomorrow… and lock in some fabulous gains… then go ahead and join the naysayers who say that the move is almost over… that is the virtue of catching a big move… you can now denounce the move all you want… just like those who hated it from Dow 6500... but the difference is, you have got money to take off of the table… the intelligentsia, they are just trying to put food on the table.

[verbatim recap]

[end of segment]

Read Jim's next Segment here