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Cramer Quick Take: Watch Home Depot Earnings

Stocks in this article: HDBBYWMT

NEW YORK ( TheStreet) -- Retail has certainly been slumping, following second quarter earnings results. Can Best Buy (BBY) and Home Depot (HD) turn it around? TheStreet's Jim Cramer and Brittany Umar break it down.

To a certain degree, Wal-Mart (WMT) can be viewed as an economic indicator and its poor fiscal year guidance didn't help reverse the recent pessimism among investors.

Cramer said that Home Depot has started to decline recently, because of the slumping housing sector and Wal-Mart'searnings report.

Nevertheless, he added, there has been an underlying trend: Consumers are still spending on hard goods and on their homes, but have been cutting back on apparel.

While Best Buy is a retailer of hard goods, its stock hasn't come in yet, like Home Depot's.

The theory of home goods and housing trumping apparel will be put to the test next week.

Cramer concluded that for the bull market to take another leg higher, names like Best Buy and Home Depot will have to shine. He prefers the latter over the former, because the stock has come down in recent weeks.

He even said he felt comfortable taking a half position ahead of the earnings report and would certainly be a buyer on a selloff.

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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