Jim Cramer is optimistic on the stock market for 2009. According to his analysis, the Dow Jones Industrial Average could produce a gain of 13.1% this year based on his predictions for the 30 components of the Dow. That’s not exactly a huge gain, but it’s also not something investors should sneeze at.

Cramer thinks 2009 will be a tough year to call because he believes it will be split into two halves: the pre-bottom in housing and the post-bottom. Cramer hopes that President-elect Barack Obama will do whatever it takes to stimulate the economy and avoid 10% unemployment for the American workforce. However, if the economy falters and unemployment breaches 10%, then Cramer’s bullish view might not play out.

Bottom line: Pay attention to unemployment and housing in 2009 because it will most likely determine the direction of the U.S. stock market.

Recently, Cramer found some opportunities in infrastructure stocks that benefit from China’s stimulus plan, big drillers that could be short sales and his top five Dow stocks for the new year. Here are some Cramer highlights from over the past week as aggregated from his "Mad Money" TV show, the "Stop Trading!" segment on CNBC and his RealMoney blog posts (these blog posts may require a RealMoney subscription).

Cramer’s Top Five Dow Stocks: Cramer has selected his top five Dow stocks for 2009. On Wednesday’s “Mad Money” episode, Cramer told viewers that Johnson & Johnson (JNJ) is a classic defensive name and has the added benefit of being down 13 points from its high. Cramer’s Top Five Dow Stocks include Hewlett-Packard (HPQ) and Verizon Communications (VZ).

Cramer’s Driller Shorts: Cramer thinks it’s time to short the big drillers. In a Jan. 7 blog post, he wrote: “However, the reason why they have been ramping is that supply has been cut back. That doesn't lend itself to more drilling; it lends its self to less lending.” Cramer’s Driller Shorts include National-Oilwell Varco (NOV) and Transocean (RIG).


Cramer’s 2009 Predictions for the Dow 30: Cramer is out with his 2009 predictions for all of the Dow 30 stocks. In a Jan. 7 blog post, he wrote: “I believe General Motors (GM) will disappear from the Dow in 2009, a historic change. GM could, like AIG (AIG), become a zombie stock, if the common stock isn't crushed in 2009 by bankruptcy.” Cramer’s 2009 Predictions for the Dow 30 include Intel (INTC) and Boeing (BA).

Cramer’s Reasons for the Rally: Cramer has found plenty of reasons that the stock market is rallying. In a Jan. 8 blog post, he wrote: “I see a lot of bizarrely positive theses going on today, many of which I disagree with. One is that the market just went down too much yesterday, giving people a chance to get back in. Fatuous. We are really overbought, and we haven't even seen what the Bear Pro Ultra funds have in for us later today.” Cramer’s Reasons for the Rally include Monsanto (MON) and Goldman Sachs Group (GS).

Cramer’s Rotation Problems: Cramer believes that the rotation game is running out of steam. In a Jan. 6 blog post, he wrote: “The rising tide is lifting all cyclical boats. The hedge funds are done selling. But I key on Exxon (XOM), ultimately, and that’s saying, Don't overstay your welcome.” Cramer’s Rotation Problems include MasterCard (MA) and Hartford Financial (HIG).

Cramer’s China Infrastructure Plays: Cramer thinks China’s stimulus plan is the real deal. In a Jan. 8 blog post, he wrote: “Chinese have a powerful need for power! So do we, but power is all about pollution. That's why the Chinese stimulus package has so much possibility.” Cramer’s China Infrastructure Plays include Foster Wheeler (FWLT) and Shaw Group (SGR).

(Editor's note: At the time of publication and/or original publication of his posts and shows, Cramer owned Johnson & Johnson for his Action Alerts PLUS charitable trust.)

Posted on Jan. 8, 2009