In the "Off The Charts" segment, Cramer went head to head with colleague Tim Collins over the chart of iShares Barclays 20+ Year T-Bond Fund (TLT) to see if the 34% run in U.S. treasuries last year can continue this year.
According to Collins, the daily chart of the treasury index is worrisome, with the index consistently making lower highs as its directional trend indicators all point lower. He noted that the force indicator, a measure of price and volume, is also trending lower.
Collins also pointed out that bonds have many resistance ceilings, such as at $120, $119 and $118, but far fewer and much wider levels of support at $116, $112 and $108. Cramer said with so many chart watchers following bonds, a slip below $116 would be significant.Turning to the weekly chart, Collins noted similar patterns with resistance on the upside and a long downward pattern towards the crucial level of $116 a share. The TRIX, a triple exponential moving average has also signaled a bearish crossover, yet another warning sign for the stock, he added. Cramer agreed with Collins, noting that after trading in lock-step with the VIX volatility index, Treasuries have now diverged. He said this makes sense since the VIX measures fear and when investors fret, they buy bonds. But with the economy seemingly turning for the better, Treasuries are the last place investors want to be, he said, and that is showing in this bond fund's stuttering performance. Cramer said the time to sell bonds and bund funds is now, as they will be dead money as stocks continue to heat up.
Union Pacific vs. Northfolk SouthernThe next installment of "All Request Week" was a tweet that asked Cramer to compare railroads Union Pacific (UNP) and Norfolk Southern (NSC). He was only too happy to oblige. Cramer said he's a big fan of the rails, as they are one group that directly benefits from a growing domestic economy. He also enjoys the rails thanks to the happy duopoly that Norfolk and Union Pacific have created. That said, these railroads are not the same, said Cramer, despite the fact that both flirt with their 52-week highs and have a 16% long-term growth rate. Cramer said he prefers Union Pacific, due in part to a repricing effort that began in 2003 for both companies. While much of the repricing to higher levels is already completed, Cramer noted that Union Pacific still has the most to gain as it completes its transition. But the real deciding factor is coal, said Cramer. With the political favor of coal waning and the price of cleaner natural gas plummeting to historically low levels, Cramer said coal will be in real trouble going forward. This bodes better for Union Pacific, as it only get 22% of its revenues from coal vs. 31% for Norfolk. But the distinction is made even more pronounced since Union Pacific is mainly a western U.S. player, where coal is cleaner. Cramer said that Norfolk's coal on the east coast is dirtier and more subject to regulation and decline. When it comes to earnings momentum, Union Pacific also takes the lead, with a 18-cent-a-share earnings beat this past quarter compared to a five-cent-a-share miss for Norfolk on disappointing revenues. Cramer said that Union Pacific comes out the winner on all fronts.
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