The Cramer Report
Wednesday July 12, 2006

  The Cycle of the Biz:   

Jim wants to make a bet - that people will lose money if they focus on earnings alone, a function of not understanding the market.  The key is to understanding the business ncycle.

Cramer thinks we are at the peak of the cycle and heading down now.

CVS Corporation CVS and Walgreen Company WAG stock went down even though both met expectations and reported good numbers.

When the Fed tightened up on May 11, both of their stocks went back up.

"These stocks just don't work when the market is steamrolling," he said.

Cramer thinks that Walgreen's stock is not done going up.

"Opportunity is knocking," he said. "The economic macro shift we're seeing is big, and the stock could still go up this year."

 It's The Sector, Stupid

It is the earnings season, but Cramer says forget it.  We are in the begining of an economic downturn and it is not the earnings that count, but the sector.

Jim Cramer likes 
Freeport-McMoRan Copper & Gold Inc., but not now.  

Citigroup says the company has the "most compelling' gold mine on earth. "

The stock has reached it's peak, he says.  It is up 54% this year, and it is coming down.  Sector-wise, it will be treated like an American mining co, and that is not good.

Cramer believes the company will make alot of money when "the smoke clears".  Until then, sell it if you own it, stay away from it if you dont.

  Apples and Applesauce

The Nasdaq is getting killed becuase it does not have many defense stocks.  Defense refers to dividends, acquisitions and buybacks, and tech stocks don't have these three elements.

However, they did have a rally today.  When that happens in times like this, you should sell a little off.

Apple Computer, Inc. is a best of breed stock, however it has it is defenseless in the sense that they have no buybacks, divedends or guidance.  That leads to rumors, of which it has no defense against.

When a stock like this goes up, sell a little.

"Apple is turning into apple sauce and I can't have that happen to you," Jim said.

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