This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

The Day Ahead: Welcome to Your Personal 'Gut Check'

Stocks in this article: DELLHPQTIFNKE

Listen. There was a "key reversal" in the S&P 500 last Tuesday -- the market jumped at the open to a new high, and then closed below the prior day's lows -- as was duly noted in Barron's, as well as in this column. That should have set off all kinds of inner alarm bells, and it should have confirmed more than a handful of negative recent macroeconomic signals that had gotten lost in the wave of bullishness. Since I believe you overlooked the meaning of that "key reversal," and since the fear there is this indecision on the next course of action, here is your gut check.

The Fed: I am starting to believe we'll see a muted to negative reaction in stocks not only if Bernanke and company reluctantly holding the line on a new round of quantitative easing, but also if the Fed acts at all. For real, $250 billion in additional bond buys will be disappointing, as it will massively let down the bulls and support the view that the Fed is running dry of actions to energize the recovery. Gut check: A lose/lose scenario is taking shape around an event that, weeks earlier, had only been seen as über-positive.

The European Union: When you buy a stock today, you are essentially pledging faith that EU politicians will act in September in a manner that keeps "euro debt risk flare" at bay, as this was a key driver of the rally. Overall, that is too much faith for my liking, and especially as the ECB gears up to convene Sept. 6 -- a meeting in which the central bank is likely to delay bond purchases, which would then undermine ECB President Mario Draghi's recent rhetoric. A German vote on the EU bailout fund is scheduled to follow that meeting, as well. These people deserve none of your faith -- case closed. It's a lose/lose scenario on the horizon.

The "China Syndrome" is rampant: I have coined a new finance term, and it's called "China Syndrome." Do you have it? Dr. Soz diagnoses it as a perpetual belief that China is always waiting in the wings with an interest-rate cut and that, should it act with one, this action will immediately reverse many increasingly worrying signs on the ground. Riddle me this: Would an interest-rate cut in the next one to three months reverse a downtrend in unit prices at Tiffany (TIF) in China due to a shift in how the Chinese are consuming? Or would it be super helpful toward cleaning up excess inventories of Nike (NKE) sneakers and of steel? I'd say "nope" on both accounts.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs