Cramer’s game plan: Focus on opportunity as market awaits Fed, China news

Investing News

CNBC’s Jim Cramer will be seeking out “man-made” buying opportunities for investors in the short week before Thanksgiving Day.

Some of these opportunities reared their heads Friday, he said on “Mad Money.” Federal Reserve Vice Chairman Richard Clarida told CNBC that the central bank should be more data-dependent and President Donald Trump said Chinese officials wanted to make a trade deal, both of which enabled stocks to pare their weekly losses.

“Immediately, there were questions about … the validity or the sincerity of both of these statements,” Cramer noted, referencing his own concern about the Fed’s lack of rigor in its policymaking.

He called Trump’s statement on China a “total wildcard,” noting the White House’s scramble to anonymously discredit the idea that they were close to making a new U.S.-China trade pact.

“Still, … if the Fed declares victory in the war against inflation, … and the president gets some substantive change from the Chinese, the market’s going to come roaring back,” Cramer said. “On the other hand, if the Fed keeps beating the economy over the head with a series of rate hikes and the president’s simply shining us on, then the industrials and the tech stocks will continue to get mauled by the bear.”

With that in mind, Cramer turned to his game plan for the week ahead:

L Brands: The parent company of Victoria’s Secret, Pink and Bath & Body Works shares its quarterly results with Wall Street after Monday’s closing bell. Cramer suspects the operator could be in the midst of a turnaround.

“The company’s closing underperforming divisions and making all sorts of improvements,” he said. “It won’t be easy. But I do think that the stock may be done going down.”

Urban Outfitters: Fellow retailer Urban Outfitters will also report earnings.

“With the stock at $37, down big from $52, I think it might not be a bad spec. That said, I do prefer other, more consistent retailers,” the “Mad Money” host said.

Intuit: Digital tax preparation giant Intuit also posts its fiscal first-quarter results, and after numerous earnings successes, Cramer wouldn’t be surprised if the company issues another blowout report.

Housing starts: Cramer expects Tuesday morning’s data on housing starts, or how many homes were built in the month of October, to be “dismal.”

“Here’s the dirty truth about housing in this country: homes have, largely, become unaffordable for many Americans at these prices,” he said. “New homes are too expensive and mortgage rates have soared.”

Earlier on Friday, Cramer said on “Closing Bell” that “the housing sector’s a disaster” and called on the Fed to pause before its planned 2019 rate hikes. Tuesday’s data could convince at least some of the Open Market Committee’s members, he said.

Kohl’s: Kohl’s will issue its quarterly results amid the wave of retail earnings reports. Cramer, whose charitable trust has been buying back into the stock, advised investors to buy on weakness.

“We’re going to keep buying Kohl’s on the way down, even if it gets hit, as they all are, because … we like the management and we think the company’s still in a multi-year comeback,” he said.

Lowe’s: Even though Home Depot’s stock “laid an egg” after the company reported earnings, Cramer said competitor Lowe’s is more of “a special situation.”

“It has a fantastic new CEO, Marvin Ellison, and I think he’s bringing back some of the old magic to the chain,” the “Mad Money” host said. “I know that many money managers regard Lowe’s as nothing more than a housing play and that dooms the stock. I beg to differ. There’s much more to this situation because it’s a work-in-progress turnaround.”

Medtronic: “The best trade of the week” is the stock of medical device maker Medtronic, Cramer said.

“Forget retail. I think you should go buy some Medtronic, the giant medical device company that’s been an extraordinary performer in an amazing group,” he said. “What more can I say? I really like it.”

Gap Stores: Perhaps the most confusing trade of the week is the stock of Gap Stores, though, he warned.

“All I can say is these guys are the kings of inconsistency,” Cramer said. “I’m always pulling for them, but they rarely deliver. Don’t fall into the Gap.”

Home sales: On the heels of Tuesday’s home starts results, Wall Street will see data for existing home sales, which were weaker in September than they’ve been in two years.

“This could be maybe the worst housing number,” Cramer said. “Why? Because an existing home sale often involves a person selling a home to buy a bigger and better home. Right now, that means giving up a refinanced low-single-digit mortgage for one that could be above 5 percent. Talk about unaffordable. That’s just plain bad news.”

Deere: Analysts are already worried that the farm equipment cycle is peaking, so Cramer preached caution with the stock of Deere ahead of the company’s earnings report on Wednesday.

“I’m inclined to believe the worries,” he said. “Be careful with Deere.”

After all this madness, investors and Wall Streeters alike will get a break. But there’s still news to be broken, and the effect on the market will be very binary, the “Mad Money” host said.

“We’re still stuck on a tightrope between the late-cycle fears and the prospect of a freeze in tariffs and of a more prudent Federal Reserve,” he said. “Which is going to win out? We won’t know until we get a trade deal or the Fed says they’ll wait and see … before committing to three rate hikes next year. Now, it’s very binary — hike or no hike, deal or no deal, except, unlike the latter, this isn’t a game show.”

Disclosure: Cramer’s charitable trust owns shares of Kohl’s.

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