October 6th - SNMX DNA

Cramer started out recommending a speculative stock Senomyx Inc. (SNMX) even though it has negative earnings and had a wider than expected miss when they last reported.

Closing Price: $15.84
After Hours High: $16.93
Percent Increase at High: 6.9%
Price Level Off Point: $16.71
Percent Increase at Level Off Point: 5.5%
Trades on NASDAQ
Sector: Services - Research
Short %: 8.3%
Days to Cover: 16.5
% Held By Insiders: 2.99%
% Held By Institutions: 81.00%

The high institutional holdings in the stock leads me to believe that Cramer's secret was already out of the bad on this one with the big boys. So there are several warning signs here with shorting this stock and they are a) low volume and high days to cover b) high institutional holders c) lots of investor confidence with all the news about record high DOW index. Its hard not to be wary of the likes of DIVX recently which didn't go down for days. There are a few things to look for come Monday and that is the $17 price point which I don't think was broken tonight and would be an important number to watch if it is broken. Normally I feel safe shorting if it doesn't break a psychological price a minute or two after the opening bell, but a few recent picks have spiked a little later after the bell. Secondly is maybe some people will do their homework over the weekend and be a little safer in their buying or forget all together, thus limiting the upside in the morning.

Next Cramer spoke of his big win on a drug stock back in the day after betting on Merck even though the drug analyst said that the drug was small time. Cramer said Genentech Inc. (DNA) has a drug call Avastin which people know about but Cramer thinks the expectations are too low for the drug. DNA closed today at $83.20 so it is too expensive and not one I would consider for shorting off the Cramer recommendation.