This Day On The Street
Continue to site
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

Defining Week for Retail; Paying the Piper: Cramer's Best Blogs

So, here's what has to happen.

First, stock prices come down. I mentioned 1643 on the S&P 500, but maybe it goes down as low as 1610 if the 10-year keeps going higher (the iShares Barclays 20+ Year Treasury Bond Fund (TLT) still looks like a short to me).

Second, expectations come down. That's what's happening now, a real ratcheting lower of estimates.

Third, when that process is completed, rates should stop going higher and better reflect the slowing economy.

Fourth, internationally oriented stocks do better because Asia and Europe are getting better, not worse. So, they are the places to go into the weakness. Those and the stocks that have little cyclical exposure that have come down enough -- like ConAgra (CAG), PepsiCo (PEP), Kimberly-Clark (KMB), Johnson & Johnson (JNJ), Clorox (CLX) and Colgate-Palmolive (CL) -- will become buys.

This process might be more gradual than today's prices indicate, if only because a lot of money is still on the sidelines and a lot of hedge funds need to catch up. But it is the odds-on scenario, and it must be prepared for.
[Read: <a target="blank" data-add-tracking="true" href=""><em>How to Make Serious Money While on Facebook</em></a>]

That doesn't mean it can't switch on a dime. We saw rates top out and we had a terrific equities rally after they did. However, we now know that estimates are too high for the companies reporting now, and that means we will even give a haircut to companies that reported good numbers as recently as a month ago.

Action Alerts PLUS has an extremely high cash position. We are looking to redeploy in precisely the multinational kinds of companies mentioned above. We don't have to sell to do so.

But if you don't own the "right" stocks, you need the bounce this market keeps giving you to reconfigure, unless you can take some pain while expectations and earnings estimates and valuations are ratcheted down to what can only be called more "realistic" levels.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long CSCO.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 15,899.53 -305.44 -1.88%
S&P 500 1,844.14 -35.91 -1.91%
NASDAQ 4,264.3820 -98.7620 -2.26%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs