August 16th - MCD MON

Cramer started out with his Top 10 reasons for the rally, and they were:

No supply
Reverse Head and Shoulders (technical analysis speak)
The Consumer is alive
Oil was down
CSCO was a Leader
The Fed may cut rates
Guys were short the NASDAQ
Guys were short capital goods
Retail is on fire
Ben Bernanke

Cramer then looked at the fast food plays and said to sell BKC Burger King Holdings Inc which of course went down after hours. He also said to sell WEN Wendy's International Inc. As mentioned several times, I don't play Cramer's sell picks either short or long. Cramer then named MCD McDonald's Corp. as the "king" of fast food, and the one to buy.

MCD
Closing Price: $35.97
After Hours High: $36.54
Percent Increase at High: 1.6%
Price Level Off Point: $36.30
Percent Increase at Level Off Point: 0.9%
Trades on NYSE
Sector: Services
Days to Cover: 1.8
% Held By Insiders: 0.08%
% Held By Institutions: 75.9%

Another stock with a large institutional presence. Similar situations like this have shown a few possible outcomes. Either stock will stay strong and have only a very small dip in price tomorrow morning, or it will have a decent dip that is "short worthy" but stay positive on the day. In this case though, since the stock is only up about 1% after hours there may be very little to worry about. The stock was up today (as it was a strong market) and trades over 5 million shares a day. The high for today was 35.99, which shows us that the market didn't want to take it past $36 yet, but we have blown through that after hours and has pushed us near a new 52-week high. In the end, not my favorite type of stock to short since it is so well known but hard to ignore the number of times we have seen a 9:30am high price for the day.

Next Cramer picked MON Monsanto Co. and said the company is hated by the street after some recent acquisitions, but Cramer says it is a buy.

Closing Price: $46.64
After Hours High: $47.11
Percent Increase at High: 1.0%
Price Level Off Point: $46.99
Percent Increase at Level Off Point: 0.7%
Trades on NYSE
Sector: Basic Materials
Short %: 1.4%
Days to Cover: 1.9
% Held By Insiders: 0.3%
% Held By Institutions: 86.7%

A curious note I would like to point out on MCD and MON. Both have very little insider holders but large institutional (according to shortsqueeze.com at least). What do the institutions know that the company insiders don't? If the company was worth owning, wouldn't the insiders be the first ones to know that? Another thing, maybe I am just beginning to notice, but Cramer is certainly picking a lot of stocks with high institutional holders. MON in particular has GOLDMAN SACHS as its second biggest institutional holder. I'm not accusing Cramer of working with some old pals, but just making an observation. More specifically on MON, it is outside my price range for shorting picks as it has been seen in the past that the more expensive the pick, the fewer people that buy the stock (probably because they can't afford enough shares to feel it worth while) and creating less of a demand for the stock to create the Cramer effect and therefore reducing the Cramer effect drop.