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NEW YORK (TheStreet) -- This market may be rangebound with little hope of a sustained advance, Jim Cramer warned his Mad Money viewers Tuesday. It's not that earnings aren't terrific or that companies aren't doing a great job, but the mighty U.S. dollar may be a headwind that the markets just can't overcome.
Cramer said there are a number of things he looks at to determine which way the markets are heading. First is how the markets are reacting to earnings. Upside surprises from both Cracker Barrel
(CBRL) and Dollar General
(DG) were treated positively, so that was good news.
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Then there's how the markets react to news flow. Today's strong auto sales were not met with overwhelming enthusiasm, a sign that investors are smart enough to know that strength in the U.S. does not translate to the rest of the globe.
There are also other key metrics, like interest rates and the price of oil, both of which have an effect on the markets on any given day.
But then there's the strength of the U.S. dollar, a single metric that now holds the fate of the entire market in its hands. Why is the dollar so important? Currencies can turn an excellent quarter into a mediocre one, just as it did with PVH
, as CEO Manny Chirico told Cramer on last night's show
Without some weakening in the dollar, Cramer concluded that the markets may have little hope of any sustained rally, as America's biggest companies will continue to fight a losing currency battle.
Is it time to start bottom fishing with the natural and organic supermarket stocks
? Investors are starting to nibble at stocks like Sprouts Farmers Market
, down 11.7% for the year, The Fresh Market
, down 21%, and even Whole Foods Market
, down 19%.
But as Mad Money
viewers learned on last night's show, there's yet another competitor coming to the natural and organic space, and it's Target
. Target, an Action Alerts PLUS
holding, has a new focus on wellness and that means its shelves will be filling up with natural, organic and gluten-free items, taking even more wind from the sails of the rest of the cohort.
So while the natural food movement is expected to top $40 billion, with so many players, including Costco
, fighting for customers, gross margins can only continue to fall.
Investors should always avoid battlegrounds, Cramer concluded, and with Target out to win, the organic aisle at your grocery store has just gotten too risky.
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