“Major and minor chords, they’re what this market is all about,” Cramer said Thursday. “We’re constantly trying to figure out which trend is the major chord that can be bought on weakness, and which one is the minor chord, which should be sold into strength.”
So what are the major chords of this market, and what are the minor? Well, the majors have been the producers of raw materials, the fertilizers and the industrials. Companies like Potash , Caterpillar and Eaton selling into emerging markets that are desperate for food and machinery. There’s also cutting-edge technology in this group, or the companies that help drive the Internet, mobile Web or cloud computing. Thinks F5 Networks , VMware and Netflix .
The minors, meanwhile, are led by consumer-products companies, health-care outfits and other stocks that serve as a defense for investors when the economy’s slow.
What’s interesting, though, is that in this run up to Dow 12,000, it’s the minors and not the majors that have fueled the move. Analysts, investors, the Street—lots of them got skittish when this season’s earnings reports started to roll in, and they sold the Parker Hannifins and Alcoas , the F5s and the VMwares, as well as many of the oil stocks, the major chords in general, because they assumed these companies just didn’t perform as well as they should have.Page 1 of 3 | Next Page