something that often happens in the teeth of the earnings season when there's just not enough time to learn whether or not a stock is worth owning. so what i'm going to tell you right now is a little antithetical even as i destroy this little polar bear. southern exposure. i want you to ring the register and take some of those profits off the table. maybe go buy a sweater or two. even as it seems like a dynamite time to buy and it's so exciting. that's right. i'm going to reiterate. do exactly what my late mom always said to do when i was winning at the tables. was there gambling going on? which is, go out, jimmy, and buy a sweater with the profits. i'm urging you to go buy a couple of them. i hate chasing. just as i tell you that there's always a better time to sell when the market is plummeting, i am now assuring you that i think there will be a better time to buy in the next few days. woo. i've given it.

my lock on some profits. take something off the table and go buy a sweater. that's the speech i have to do every time we have a run like this. let me explain a pattern that i've discerned that could be incredibly important. important for you to take profits on if president obama regains his clout and starts pushing hard with the rest of his agenda. everyone today wrote him off because of the health care. i got to tell you, you can't write this guy off. he's too darned popular. all right. let's look at the streak tech stocks have had here. the nasdaq has closed up 12 straight days. when you see something like, you to take a step back and ask yourself, is there something going on that's bigger than all the visible themes? the ones i've talked about on the show endlessly, the low semi conductor inventories, new product cycles based on the mobile internet and valuations that just got too low? there is. i figured it out. washington doesn't care about tech. it's not trying to legislate tech out of its profits. it's not trying to handcuff tech

into paying -- having a higher cost. that's right. i am telling you that tech is immune from president obama and more importantly, democratic chieftain nancy pelosi. and that's why tech can go higher. i don't want to go against president obama's agenda because i know that we have to undo the bush administration's legacy of companies constantly feeding at the federal trough. and we know that was going on. you know, remember, we used to have a government of, by, and for the corporation. well, ladies and gentlemen, despite what the stock market is saying, we are indeed back in lincoln mode with a touch of warfare. this is a government of, by and for the people except for millionaires. i feel disenfranchised. and that means washington has an agenda that's harmful to the earnings of a lot of companies. but not necessarily the tech. technology companies aren't unionized so they can't be hurt

by forced arbitration. i believe that's the next big battleground. tech doesn't pollute. cap and trade doesn't really matter. tech companies aren't much for pensions. we're for help for the government with health care. these are businesses with 401(k)s and no legacy pension plans virtually. tech doesn't sell products to the government that increase the budget like the defense contractors do. it doesn't sell products that make medicare too expensive like the drug stocks, the biotechs and the hmos. and most important, tech doesn't need a helping hand from the government. there isn't even a scintilla of a hint of a bailout that's needed for any tech company. and no player in tech is too big to fail. we don't have to worry about sheila bear coming in and saying listen, i'm sorry we're not guaranteeing your loans. there are no loans. and tech isn't regulated by a government agency like the sec or the antitrust division although periodically they go on the war path against intel. i believe tech is basically immune to washington, something hardly any other sector can say. and that means the big boys are

willing to pay more for the earnings of tech stocks because washington is not going to legislate them away. they know that they don't have to worry about waking up one morning, looking at the front page of "the new york times" and finding out that there's some proposed piece of legislation that will kill their tech stock profits. which is a concern for virtually every other industry. i mean, think about. the oil industry, the telco industry, the credit card industry. nobody in washington looks at profits and tech as a means of taxing their way out of the deficit, the way they salivate over the windfall profits of the oil and gas companies. tech isn't about to be legislated out of existence like the coal and tobacco companies might be. so many companies fed at the public trough during the bush administration and they're now slowly being starved to death. few companies are as international as most tech, which often do more business in asia than the united states. they can build stuff anywhere so they can move it if the taxes get too high. they don't have pesky

and expensive workforces, and they don't have to hire anybody to make more money. in fact, they can fire at will. it doesn't seem to bother them at all. that's the secret behind this 12-day rally in tech. their earnings aren't determined by what the president says or -- what's her title? kremlin? oh, what pelosi says. for tech, it's all about the business pages. no washington worries, and that's something money managers who want to sleep at night adore. it's why the intels and the ciscos and the apples and the oracles and the googles not to mention the software companies or little guys like semiconductors can do well. those are all stocks i've been relling on the show. by the way, i think that apple can go to 200 in the next few months. it's the most immune to washington stock that i can find unless they start taxing ipods. i want you to think about this non-washington halo tomorrow if the nasdaq is down because amazon reported

disappointing earnings tonight. yes, i still like amazon. here's the bottom line. tech can shine simply because it's practically the only sector that's not touched by obama or pelosi's agenda. what a multiyear theme. could last 3 1/2 years. because you can bet this one -- well, let's just say until people catch on about what's going on in washington will remain undiscovered and the stock prices will go much higher and, yes, there's going to be a lot more stuffings knocked out of the bear. i say we take calls. anyone else agree? okay. how about we speak to michelle. michelle? >> caller: jim. i'm calling about google. i understand it's got a mobile operating system, and it's trying to get into this industry. so i'm wondering, can they really swing it? and if so, how is it going to affect the other players in the industry? >> no, i don't think they can swing it. i think that it's part they want to try to do that but operating systems are owned by microsoft or apple.

microsoft is really the dominant player 97%. i think it's nice that google is doing that. you want to own google because advertising. it's an advertising model and a predator model. i know it doesn't like to think of itself as a predator. probably more like the alien but i genuinely believe google is a play on just going to the site and hitting something up and seeing the ads and clicking on them. and that's how we're going to view google no matter what they talk about with operating system. let's speak to stevarino in texas. steve? >> caller: yes. boo-yah to you. >> good to see you. >> caller: listen, i wanted to make a comment and then ask the question. in relationship to the stimulus money, which a few weeks back news commentators were saying we weren't getting any benefit from it and the country is going in a hole, you know, reality is only about 6% to 7% has been spent. that leaves a huge amount still to be -- continued to be spent. >> right. >> caller: so in order to compete effectively with the

chinese, you know, in, say, areas in energy, infrastructure, and small business, where could we target best the remaining 93% of an $800 billion stimulus? >> well, i think -- you're absolutely right. it's going to trickle down. and i think it's finally going to trickle down to the most basic company, copper and cement. i'm talking about freeport. it's going to trickle down to steel. steel hasn't seen anything at all which is why i'm so jazzed about nucor. but you're right. the stimulus dictated by nancy pelosi has not worked in this country versus the chinese stimulus, which is still moving on. all right, listen. the bears have had their stuffing knocked out. where can you still buy even though we've had this big run? i think tech. because tech is immune to washington. tech will come down tomorrow off the amazon quarter and then maybe you do some buying. but never forget we want to take some profits. because you never know when this

guy is going to come back again. stay with cramer. coming up, is a bottom for the steel industry in sight? cramer gets the state of the sector with nucor's ceo dan dimicco and finds out interest this dealmaker whether the economy is ready to forge ahead. plus, which smart phonemaker takes the top of the tech heap? jim makes the call on which could be dialed in for dollars and which you should drop on the sell block. and later lightning strikes. cramer goes electric taking all your calls in a spine-chilling overcharged "lightning round." all coming up on "mad money." (announcer) take your time to find the right time

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all right. i got companies i like. i've got execs i like. you're about to hear from one of them. i play favorites. it's true. my favorites are people who make us money. my lack of favorites are people who lose us money. today, nucor, the largest steelmaker in america by production, reported a better than expected second quarter. this looking more like a riddle wrapped into a mystery inside an enigma. nucor delivered on earnings delivering a 30-crept loss while the street was expecting a much larger loss and its revenues came in about $130 million above what the street was expecting. with total shipments up 11% compared to the previous quarter. we call that the linked quarter. now, on the one hand, nucor said it expects the third quarter to be better than the second so so far i'm spoiling. the company also indicated it's working through its raw costs that it has as an inventory. usually nucor uses much cheaper scrap, less expensive. with continued improvement in orders it could work through that more

pig arm it could work through that more quickly, which would mean a real boost for earnings. its raw costs would go down. utilization rates were on the rise, up from 38% in april to 54% in june. and dan dimicco, the ceo, said that july has gotten better. yeah, dan dimicco, i've got to tell you something. if he tells me we're near the bottom in the steel market, i think we're there. now, he did say in june, late june conference that he thought we were there. when the best in the business tells you we're nearing a bottom or out of a bottom then you have to buy his stock on me decline. but let me give you the other side. the company seemed very cautious about whether the current uptick represents real demand or just that classic kind of restocking. they ran out and go order steel and when they're out of that -- doesn't ever create good sales and higher prices. he says the recovery could take at least three years. so steel has bottomed. it could very well stay there for a while. in other words, instead of

having a "u" recovery, we just have an "l." the any question is whether it will still. if their question is whether it's reel, then i think i have to be concerned, too. i think nucor is the best american manufacturing company perhaps save caterpillar. but lately i've taken a katy perry hot and cold approach in the stock. i think it's a buy and a super-strong buy on a pullback below 40 when it drops low enough and becomes an accidentally high yielder. but now i got to make sure nucor doesn't have a hot and cold view of itself. and the steel industry. their results suggest steel has hit bottom. what i want to know is if that demand is real and it will stick. and there's no one that can answer these questions better than one of our greatest guests, dan dimicco, nucor's fabulous ceo. and a good friend of the show. mr. dimicco, welcome back to "mad money." >> my pleasure, jim. thanks for having me. >> dan, i tell you because i am a -- a close reader of your conference calls and try to interpret everything you say, i

felt great, and then i felt bad and then i felt great. you know, you got to tell it to us. you know you did that. you knew you said just enough negative to make us feel like the utilization rates are going up and two price increases for important lines that we should not get excited, should we? >> well, jim, the key issue here is the economy overall. and we've got a long, slow recovery in front of us. and so we can't ignore that. certainly things have gotten better for the steel industry. the demand situation is one where in reality, up to this point, real demand -- that means end-use demand hasn't improved a whole heck of a lot since the end of last year. but what has gotten better is the customer base, both oem and service centers, distribution centers, have gotten their inventories down to 1983 levels. and what that means now is that what we call parent demand, which is what our customers are -- are actually ordering

from us at, as opposed to what their customers are ordering from them at, that apparent demand now has gotten to real demand. they're no longer taking out of inventory. they're buying all their needs based upon real customer demand from us as opposed to part from us and part from inventory. >> okay. wait. you put through two price increases because of what you described? >> yes. >> even though we're in a terrible environment, you're able to put through price increases? >> yes, we have. and we've seen some raw material increases take place recently. so we've been able to get price increases through. but as we talked about in our call today, utilization rates -- at our mills for june were in the mid-50s. we haven't seen things that low in our entire history. >> well, 38 in the month of april. but, yes, this quarter. >> yeah. >> there's a great conundrum for me. and it's not just how good you guys are but i'm going to bring up a chart that i know you sent me. but first before i show it, it's a chart about job losses and u.s. recessions. i have to marvel.

everybody that i've seen, every ceo that's come on, how did they make their numbers? they fired people. tell people what you did to beat your numbers. how many people have you fired? >> we didn't fire anybody. we don't lay people off in our company. we never have. and we have not laid anybody off, any of our nuc ochlt rchor employees off in this great recession that we've had so far and have no plans to. what we do is we build loyalty and trust and ownership in the company's goals in our teammates over the year, over the long term. we've always been a long-term focused company, which means you work together through good times and in bad and you don't tell people they're important to you when things are good and then tell them to get lost when things are tough. our people have responded tremendously by finding unique ways to cut costs and cut costs in a serious manner. if you take a look at our operating costs, they're down dramatically quarter over quarter. and that's going to stay.

that's not going to go away. and we'll see even more coming up in the third and fourth quarters. so our employees have rewarded us by using their innovation, using teamwork to keep us in the game, to help our customers get a better quality product, more timely delivery. and so it's a two-way street. >> okay. but, dan, isn't the american way -- let's show that job loss job loss recession chart that dan sent. isn't the american way to fire people and have a government that doesn't really provide jobs to take the slack? >> well, i'd like to think that wasn't the american way. certainly there's rationale for companies acting the way they do. nucor has never shared that rationale. we've been very long-term focused. there's too much short-term thinking that goes on in this world. but some of that in part is due to the management, and some of that is due to unions. as you know, nucor does not have unions at nucor corporation proper. and so we've always had this

attitude that we're in this together and we're going to share the pain and share the gain. so right from the top to the bottom, we're all in it. my pay gets hit big-time when everybody else is getting hit and i do well when everybody else is doing well. the job slide that you have up there is very disturbing. and i appreciate you putting that up there. and today "the wall street journal" even had an article showing a very similar, if not identical, slide and series of slides. and what it's telling us is that this is the worst job loss recession that we've seen in our lifetimes, number one. number two, look at the trends. look at the slopes. from every successive recession from the '70s through 2001, the slopes have gotten flatter and flatter on the recovery. that's what's known as an increasing jobless recovery. in the last one, you go out 0 months, and still we haven't got back in the job creation. look at where we are today. look at that lower curve. >> i know. >> and if we had the same flat

job creation response that we've seen successive -- each successive recession, this is going to be a long, slow recovery. we're not talking about 7 million jobs being lost. that's going to happen with the numbers that come out tomorrow. we're talking about this thing showing job losses cumulatively that could be as much as 10 million jobs. and then that doesn't even take into account all the people who have given up looking for work or those who are like our employees are working part time. >> dan, you're absolutely right. i'm amazed that you were able to do these numbers without laying off people, but i know the takeaway from all the ceos i see all day, which is they made their numbers by firing people and now they're going to keep firing people because it makes the bottom line look better. doesn't really help the long-term situation of our company. dan, i've got to run. congratulations on your great numbers and for bringing public those figures. that's why america has to recognize that this recovery is not going to be an instant snap-back. not without employment growth. thank you, dandy mikko, from

nucor. >> thank you, jim. >> dan dimicco's conference calls are a joy. i urge to listen to his calls. straight talk, not politics, but what would be great for america and what's great from nucor shareholders. and why i reiterate this is the best manufacturing company to own -- best manufacturing company in america other than maybe caterpillar. stay with cramer. coming up, which smart phonemaker takes the top of the tech heap? jim makes the call on which name could be dialed in for dollars and which you should drop on the sell block. he faces a nonstop barrage of calls giving stock after stock their final verdict on "the lightning round." and later, cramer goes inside the beltway with senator ted coffman to make his case to a return to honest short-selling on the street.

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trend for owning a smart phone like apple's iphone or research in motion's blackberries has gone from being a luxury to a necessity and that makes it a game-changer. but tonight, it's time to throw one of the mobile internet plays that i've mentioned over and over again under the bus and off the wagon and into the cell block. i'm talking about palm. ever since i started beating the smart phone drum, i've mentioned the iphone, the blackberry and the palm pre practically in one breath as examples of this huge new tech product cycle. but that doesn't mean the stocks are in any way equivalent these days. not after some of these runs. and, in fact, the products don't even come to being close to equivalent. there may be enough room in the market for the iphone, the various different blackberries and the palm pre but that doesn't mean all smart phones are created equal.

some are way more equal than others. from sentiment from famous george orwell. i've been bullish on palm. so far it's been a good call. but i think if you own it, i think the time has come to take profits. again, we know that you can have more than one smart phone to be bought, but there is only room in your diversified portfolio for one smart phone stock. and i think that play is apple. now, it's apple without a doubt. all right? obviously apple is the better company with the better product. i don't think anyone would argue that point. the new iphone 3-gs which launched barely two weeks after the palm pre is so much better that comparing the two smart phones is like comparing apples like this one to those fake apples. you know, the ornamentation kind that you never want to make the mistake of biting into.

oh. [ inaudible ] and i'm mott even covered -- the new -- i'm not even covered. the new iphone sold more than 1 million units by the third day after it was launched. when apple reported this week, it said it's been unable to make enough of the phones to meet demand. i call that a high-quality problem. the rave reviews, the new iphone operating system and the whole itunes platform behind the iphone, including the ap store, which is perhaps the best illustration of the strength of the mobile internet next to what? what does palm have? i mean, really. what does palm have other than this fine ornamental apple? oh, and for the -- for a personal comparison, i got another one i'm not even going to go into the fact that apple has a computer business that's pantsing the competition. or how about its cash cow ipod business? apple is the king of the mobile internet and i think you can trade at $200.

because if it's phenomenal increase -- i'm praying it will go down tomorrow off of microsoft and amazon so you can buy some. really, i want you to do that. you simply cannot make a comparison between apple and palm. in fact, the only category where i like palm more than apple is in the takeover prospects. apple obviously taking over -- a huge amount of cash. like $30 a share. but i don't think that they're nearly as great, the takeover prospects, as the chatter would have you believe. and by the way, of course, we never recommend stocks on the basis of takeover speculation when we think the fundamentals could be deteriorating. we still don't have any official sales numbers for the pre, but the current evidence isn't exactly encouraging. as it seems the new iphone has already won the summer smart phone slugfest, remember all of the hype and enthusiasm when the pre came out? six weeks later the thing is barely in the news. and the demand has seriously tapered off in july. there's been numerous complaints

from customers about the pre's software platform and its crummy hardware, not to mention reports of large returns of the product. very controversial here. in fact, the analyst who covers the stock from jessup and lamont indicated the return rate for the pre could be as high as 40%. look, i -- that's absolutely awful. that's jessup's numbers, not my numbers. let's don't forget sprint. they're the palm backer, which means less marketing juice in a business where marketing matters tremendously. because you've got to subsidize the heck out of these phones. the story isn't that palm versus apple is like david versus goliath. the real issue is that david's sling has hardware problems. he probably should return it to the sprint store before getting into the arena. the pre was supposed to be palm's future. and given that it doesn't look like it's even living up to the

hype, i don't see how it makes sense to keep owning the stock here. i just don't. sure, palm has a new management team. but let's remember where this company was before the pre came out. it had been left for dead. it was road kill. its product is not included in market share tables because its sales were barely a blip. palm had a stagnant portfolio and it sunk to $1.15 on december nd as investors decided the company wouldn't make it. now palm has made a comeback and its stock probably never should have gone that low in the first place. but get this. it's up an astonishing 1,142% and it's up 360% since it began the year at $3.07. the stock peaked on june 30th at $16.60, just a couple of weeks after the pre was released and it's been downhill since then. right now, i look at palm and i see a one-hit wonder. by the way, i'm not focusing on the one-hit -- i mean no-hit wonder that we saw earlier with the white sox. the one-hit, the pre, is looking less and less like it can

justify that kind of run-up in the share price by the day. here's the bottom line. look, you don't need me to tell you that the palm is no apple. it's a speculative mobile internet play with one big product. the pre, that's turning out to be less impressive than we thought. apple is an investment. palm was always a trade and that trade has now, as of this moment, run its course at 14 and change, which is why the way i see it, palm belongs in the cell block and apple is still up, buy, buy, buy. phony one. mark in texas. mark. >> caller: yes, jim. hey, a big boo-yah from mark and family in east texas. >> familial boo-yah. go give me a nacogdoches boo-yah. there you go. >> caller: hey, the only thing hotter than the nasdaq is this weather. but would you be buying qualcomm at these levels or maybe google or apple? what do you think?

>> all right, okay. now, it's very interesting. qualcomm, i sold some ahead of the quarter. my charity trust. i'm looking to get back in and buy more stock. the hype had gotten too great. when the stock falls to the mid-40s, it was a great quarter but the hype got too great. google, i thought the quarter was just okay. we need to see a -- it has more cyclicality like i need to see a revival of the ad market but google is just too expensive. apple, i would just buy right here. apple i'd buy right here because the gross margins are going up, the top line is going up and the bottom line is going up. they have a demand overwhelming supply. you're rolling out the china iphone. i just think apple here is so good that i hope it comes down so we can all get in at a better price. i would like to go right now to adelle in new york. adelle? adelle? >> caller: thank you. i'd like to talk to you about vm ware. since vmware is an instrument of

virtualization and we have proliferation of handheld mobile instruments and it's growing, wouldn't vmware have a long way to go? >> yes. i was very pleased with that quarter. again, a charity trust. i was quite worried that they would guide down -- this was actually a turn quarter. i think vm ware can go dramatically higher from here. i believe that of the quarters i saw today, two that i own for my trust for action alert, ebay and vm ware, are the beginning of some very big moves, and i recommend them both. ebay and vm ware work, and i want you to sell, sell, sell palm because apple has triumphed over the hand. don't talk to the palm. don't talk to the hand. eat the apple. smart phones aren't created equal. palms trade in the cell. apple is a buy, buy, buy.

coming up, the madness goes nationwide. >> a big buffalo boo-yah. >> boo-yah from the scorching deserts of west texas. >> from sizzling southern california. >> jim takes your calls from all across cramerica. >> boo-yah from st. louis. >> 110 boo-yah from phoenix, arizona. it's time. the "lightning round." later cramer goes inside the beltway with senator ted kaufman to make his case for a return to short-selling on the street all coming up on "mad money." gecko vo: geico's the third-largest

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it's time. it's time for "the lightning

round" on "mad money." oh, boy. rapid fire. one call after another. you say the name of the stock, i tell you whether to buy, buy, buy or sell, sell, sell. "the lightning round" is over when you hear this sound. are you ready? see skee-daddy. it is time for a yes. amazon coming down. cramer "lightning round" on "mad money." so let's start with tim in georgia. tim? >> caller: jim, how are you, buddy? >> what's up? >> caller: i'm from brunswick, georgia. >> brunswick. we get calls from everywhere. hey, isn't brunswick near the coast? >> caller: right on the coast. >> supposed to be beautiful. >> caller: beautiful. >> it's supposed to be beautiful but we'll do the show from your house. what's up? >> caller: i'm calling about milan pharmaceuticals, symbol name myl. >> you know, it's been a hot stock. it's been a hot stock. if you're going to be in there, i like teva. it's a mixture of generic and proprietary. and that's my favorite in that

group. why don't we go to george in california. george? >> caller: big boo-yah for you, jim. >> boo-yah back. >> caller: i want to know what you think about dgw, duoyuan global water. >> that's a chinese water company. chinese is going higher. it is the answer to a lot of people's prayers to try to find some play on water. i am a huge believer in china. i disagree with my friend ron who writes the market movers newsletter. he thinks china is a sell. i think it's a buy. i will not embrace this one because i haven't done the homework. but i like the fxi. i like the whole chinese market. how about andrew in new york? andrew? >> caller: giddy-up, cramer. andrew from saratoga, new york. >> oh, man. hey. >> caller: i've got a horse for you. listen to this. how about aruba networks? should our chambers be worried we may be clipping heels with -- >> no, no, no. it's part of my mobile internet theory. it's a buy, buy, buy. it's a little $7, $8 stock. i think it goes higher. probably get the market down tomorrow. mister softee is going down big because amazon is going down

big. i want to buy the amazon on a scale-down, and it could move your stock lower where i want to buy, buy, buy it. how about ryan in kansas? ryan? >> caller: hey, jim. kansas country boy boo-yah to you. >> wow. new kind of boo-yah. what's up? >> caller: i've read "mad money," i've done my homework, i know growth and profits are king. i like what it's done for me so far. tell me what you think about rino international, r-i-n-o? >> stump the chump. don't know rino. just don't know it. got to do some work on it. i've got to come back. you know that i do that. come on. i'm busy here. give me a mea culpa. when you buzz me, it makes me look even worse. here's what i do. i take rino home with me this weekend. that's fun for me. reading transcripts. everybody else goes to the beach and have gibb and tonics. i'm going to sit down with rino and come back with an answer for next week because i'm a party animal. how about peter in massachusetts?

peter? >> caller: how are you doing, jim? >> not bad. thank you for asking. how about you? >> caller: i'm doing fantastic. i just want to give you a big-time beantown boo-yah. >> i want to give you a -- i was on the show this morning "morning joe," and they were talking about rest in peace red sox. i think that's a little early. >> caller: no, no, that would never happen. >> all right. go ahead. >> caller: but i got to question you. i'm getting a little worried with mco. >> you should be worried, my friend. warren buffett is selling. calpers is suing. what the heck, man? that is a -- you know, i can't say -- liable -- libe. l laws prevent me from saying what i think about the ratings agencies, but i don't want to be -- i know it's got a big cash position. but i do welcome moody's people on. we'll have a roundtable with you. we'll go out the dairy queen.

the commercial mortgage bonds and the residential, i welcome them. we'll get the brassiere or whatever it is, the brazier, and we'll deal with it that way. invite everyone from moody's to my beach house this weekend. and "the lightning round" is over.ll ket or bear, ket or bear, traders are always hungry for ideas. they find them at td ameritrade. trading's all about strategy. and strategy's... all about information. so: i start my trading day... with td ameritrade's morning perspective. that's interesting... or, look at this... i can mine their weekly webcast for ideas. this is what i need. of course, ideas are just the start. so now i can drill down. heat mapping... heat mapping shows me where the money's moving. 2,500 stocks... one quick glance. cold... cold. hot! right there. look at this: pattern matcher... pattern matcher spots technical patterns, automatically. wow, look at that. look at that head and shoulders right there. it's like pattern radar. pattern x-ray vision. plus: this amazing gadget... called the telephone. i can call td ameritrade anytime

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the market has been on a real tear lately, but that doesn't mean we can afford to forget about the financial chicanery that almost destroyed our financial system earlier in the year and last fall and cost taxpayers billions upon billions of dollars. and what am i talking about i'm talking about bear raids by naked short sellers, guys who did not borrow stocks who then slammed it down. there's nothing wrong with normal short-selling. where an investor bets against the stock by borrowing shares from someone else, make sure he's got the stock, selling it, and then hopefully buying it back at a lower price. that's fine. it's been going on for hundreds of years. but naked short-sellers, guys who don't have the stock, manipulate the market by banging it down without even bothering to see if there's any shares to borrow first. now a group of senators may have found a solution to this

problem. a so-called hard locate system that would require short sellers to find and identify specific stock with a unique i.d. number before the brokers would be allowed to execute the trade. short-sellers just need to have a reasonable belief that they'll be able to deliver the shares they're selling, which allows multiple short sales of the same stock. to put it simply, this would stop unscrupulous hedge funds from being able to sell shares that they ultimately won't be able to deliver. that's market manipulation as far as i'm concerned. nobody should be able to sell something they don't own unless they can show that they'll be able to deliver the property with the consent of its actual owner. pretty simple. buyers need confidence that they'll get what they're buying and the market needs confidence that the shorts aren't creating shares out of thin air and then selling them in order to manipulate a stock lower. that's the kind of market this hard-locate system could make a reality. i find it very appealing. i'm not in a position to effect any change. so let's talk to someone who is.

senator ted kaufman of delaware one of temp senators that proposed the solution. sport kaufman, welcome back to "mad money." thank you for taking the time to talk to us about this incredibly important fight. >> thank you, jim. thanks for letting me back on again. >> senator kaufman, i have to tell you i'm sure there are people within the s.e.c. who says i don't to why the senator is bothering with this. the market is a bull parke again. everything is fine. what are we loried about? how do you respond to the possible ripost that things are good. >> a bunch of somebody, predatory bears made a lot of money when the stock market went down and they've got it all there and sitting there and waiting for another bear market to do it again. this doesn't take rocket science to figure out that those people are waiting for this to happen. if we don't institute some changes to go after it so we can't have naked short-telling they'll be right out doing it again and bear stearns or lehman

brothers going down the chute. >> i made about half my money short selling when i was a hedge fund manager and here's what i did. i would -- when i wanted to sell something i'd pick up the phone and call my broker and say, i need a locate on 10,000 shares of target. i want a short target. they will then call their back office, find out if there was 10,000 shares to borrow, they would then give me the okay and i would sell it. what government, what administration took that process away that made so much sense? >> well, you know, that's exactly what i did and why i'm so shocked that you can just go in and really sell stock on a reasonable belief so, no, a lot of really bad things went on. it's pot just this. as you know, we changed -- s.e.c. changed the capital/asset ratio and have oversight of standard & poor's and moody's. a whole bun of bad decisions made and this was another bad decision and i think, you know, the chairman got it right when she said during the nomination

hearings we have to reinstitute the uptick rule and that's really what has to happen. shoe, we made a big mistake. as we all know in every management book you learn from your mistakes so we have to learn from your mistakes. >> go back to reasonable belief. if i am a cock-eyed optimist about the ability to locate stock, why do i even have to just -- it's just my own, listen, sounds good, i can do it. >> exactly like taking your car title and printing up three copies and selling it to three people. total complete speculation. don't have to put anything up. don't have to do anything and so it is absolutely speculation. it's wrong. everybody knows it's wrong. i think the main thing they're trying to figure out is exactly what to do. that's why i was so excited when we located dcc and talked to them about some method. they do all the back office work so i thought was let's talk to them and see what they come up. it was great talking to them. rarely in this business do you

get something that looks like discuss what you're looking for. >> you're right. i thought it was a great idea. i always had to go to my account was at goldman sachs and would ask them to locate the stock. wish there was a uniform system of locate. you've got the solution. >> i did the same thing at merrill lynch. you have to -- they've got everything in stock. what used to happen on this, jim, is there would be 500 shares of let's say, at&t, i'd say, okay, i can sell 500 short. you could say the same thing. what this thing does is once someone identifies it and wants to sell short it gets taken out of the system so no one else can do it. when you actually go to your broker to sell it you've got to have a flag that shows that they're holding the stock for you to sell it. real simple. not the only solution. we have to get rid of the preborrowing and something about uptick but it's a really good shot at ending this thing. >> senator kaufman, concise,

fabulous depiction of and description of the way it's happening.

everyone is freaking out. give me a break. this did your chance to get into apple. you've been waiting. they're giving it to you. there's a bull market somewhere. i promise to find it for you on "mad money." i'm jim kraler. i'll see you tomorrow. >> next, a key aerospace supplier flying high. the ceo of good much rich talks numbers. he tackles earnings season. should you go long? "fast money" coming up next on cnbc.li daily use... a clinically proven, low-dose tablet for erectile dysfunction you take every day so you can be ready anytime the moment is right. tell your doctor about your medical condition and all medications and ask if you're healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. don't drink alcohol in excess with cialis.

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we've got an after-hours massacre on our hands. microsoft plunging 9% in the after-hour session. amazon and america express down big tim also. i'm melissa lee. these are the "fast money" traders and this is "fast money." it is the s&p 500 closing at the highest level since november, but it's in for a big retreat tomorrow. if these moves follow through. how do you protect yourself and profit? let's get to the word on the street right now. and, of course, we've got to talk about microsoft first. for that, let's go straight to jim goldman who can give us the very latest on the quarter. jim? >> yeah, you know, melissa it's 5:00 eastern. and to borrow a cnbc phrase, do you know where your $1.25 billion is? this is such an ugly report from top to bottom, i can't even tell you. let's get to the details here. 34 cent, cents light. about $13.1 billion in revenue.

as i said, 1.25 light, even though the company is deferring $276 million in windows 7 related revenue. each of the company's key client revenue, server and tool, the company's business division, entertainment and devices all of them million, 3 million, $400 million lighter. you can bet that analysts are going to be eager and anxious to find out why business was so soft. that's one point. the company's cfo is talking to "the wall street journal." he does say that tough economic times will last for the remainder of 2009. but there is some reason for optimism into 2010. one final thing i would add is that, you know, before we jump to conclusions here that microsoft's business is falling off a cliff, just keep in mind that windows 7 is on the way. so is a new office suite, so is new server software. there are major new products in the pipeline. it's likely that some of microsoft's customers are holding off purchases not beca