On Demand

Transition, Opportunity, And Cramer Is A Meany

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I think it is time to shift gears, if for no other reason than we need to stay one step ahead of the market. Now, don't listen to me about this; listen to what one of the really big celebrity traders has to say about my thinking.

'The market's stupid. It's moronic. It's imbecilic. Dumb as a bag of hammers and slow as molasses, which, alas, is your edge because anything that idiotic can be gamed by you at home," said Jim Cramer on CNBC's Mad Money.

Aside from the weak 4th sentence above and the demeaning language about the market, the wild character from Mad Money actually makes a good point - the market often acts irrationally, and when it does, it provides opportunity to those who are looking for opportunity in the market.

To be clear, I don't agree with any of Cramer's characterizations about the market. In fact, as I have said time and time again, the market R us, so how smart would it be for me to agree with all those pejorative descriptors? Not very, I think. But I digress. Let me get back to my point.

Opportunity is here and coming because of the market's irrationality. The reason Cramer spouted off about the market was the reaction it had to Cummins (CMI) lowering their guidance for the remainder of 2012. He sees this as stupid, moronic etc. I see the reaction as irrational. He thinks the move is excessively stupid because all the signs of a global slowdown have already been posted and the market should have seen this coming. I believe the reaction irrational because the market is looking for any and all reasons to sell, as it is afraid. Putting Cummins aside, the market reacting to fear makes for opportunity.

AMD and other chipmakers are grappling with slowing demand, as consumers shift to mobile devices and economic growth weakens in Europe and emerging markets.

It is no surprise to me that AMD is experiencing a tough time in the chip market. They have a small share of a declining market and their innovative abilities seem to have disappeared. So how much of a barometer is it when it comes to the economy or chip sales? More importantly, what is their poor showing telling us to look for as potential opportunity?

Taiwan's biggest chip designer, Mediatek sees high double-digit growth in its shipments of smartphone chips this quarter, and is looking to benefit further from booming demand for lower-priced phones as it packs more brainpower into cheaper chips.

Transition is one key word here, as the market does not like change. PC chips are going away and smartphone chips are coming in, big time. Opportunity is the other key word here.

The trade deficit in the U.S. narrowed in May as falling crude oil prices and weakening demand for consumer goods trimmed the import bill. Purchases from abroad fell to the lowest level in three months, while exports climbed to the second- highest on record.

Yup, opportunity is both here and coming, as the market continually looks over its shoulder at what is behind it and it only sees doom in front of it. The supposed bad news above speaks to this notion as declining oil imports is a very good thing and increasing exports is also a very good thing. Transition ... The market does not like this, but market players should.

Trade in the day; Invest in your life ...

Trader Ed

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About the Author

Hello, I am Trader Ed.  No, not Mister Ed, although at times I feel a bit like a talking horse.  You see, my job is to educate folks about the market, which means talking about (or writing in this case) anything and everything that affects the market.  This means the world is my oyster.  Every day, I read for about an hour or so about the happenings in the world.  Every day, I look for leading indicators that will help me “see the future.”  No, I am not an oracle, nor do I pretend to be, but I do look for macro trends that point in a direction, and I am more than happy to share my “vision” with you.  Keep in mind, though, my vision derives from analyzing the fundamentals of the global economy, as well as looking at current movement in the market.  I shun the doomsayers and I embrace the realists.  I look to the positive without denying the negative.  In short, I paint as realistic a picture of the market as I can.  So, if you have a question in this realm, feel free to ask me.  I will answer you in this column and I will do that to the best of my ability.

Hoping to hear from you.

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