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Anything but Normal Times for Market Players

Posted at 3:33 p.m. EDT on Friday, Sept. 18, 2015

Rates are lower! Oil is going down! We are done with the Fed!

What's not to like?

How about the fact that we are stuck in technical and calendar hell? How about that we are now going into a seasonal moment where we have been down 20 out of 25 years? How about the fact that so many charts seem broken, even as things are basically OK?

We are in the grips of a moment where there's just a lot of foolhardy commentary and complaints about a backdrop that has produced terrific results for years now: lower rates, lower commodity prices, decent dividends and higher prices once the futures tsunami ends, for good growth -- growth like Bristol-Myers(BMY) - Get Report. And you wonder why I always stretch that one out when I talk about it.

How is it that these positive inputs can produce such miserable outputs? Some of it is because of Fed worship. The Fed says there is weakness so suddenly we ask, "There is weakness?" Why did we think the industrials have been going down for months on end? The Fed says, "There's international turmoil." Did someone think that there wasn't?

I wonder, if the Fed said, "We are in a bear market for many stocks," would we then take stocks down that have been going down because that's revelatory, too?

I know that to keep coming back to the long term is a total drag. But when there is such a genuine revulsion to stocks and Wall Street and central bankers in general (thank you to Real Money contributor Matt Horween for that observation), you aren't going to be able to do anything but find stocks that you like and buy them on the way down in big scales.

Here's an example. We own Honeywell(HON) - Get Report for my charitable trust, Action Alerts PLUS. Jack Mohr, the research director for the trust, and I check down our list the same way that a good quarterback checks down receivers looking for something to buy, not sell, into this weakness. We did the selling into strength.

We settled on Honeywell, which we like and have room to buy some because it is below our basis -- three bucks under. I said let's pass and wait for a further decline. No need to be a hero on a Friday afternoon because if nothing good happens over the weekend, the market will probably open down on Monday. That might be a better time and a better price, perhaps $95?

It's a logical way to look at an illogical world, where stocks are going down with a backdrop that normally produces higher, not lower, prices -- but we are in anything but normal times.

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

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The Fed Decision Will Boost U.S. Companies' Earnings

Posted at 5:48 a.m. EDT on Friday, Sept. 18, 2015

Let's see how many people still get it wrong. European stocks are going down for a good reason --not that Fed chief Janet Yellen should have raised interest rates, but that she didn't.

Yellen's non-move may have put a longer-term floor on the dollar and the euro put in a monster day vs. the greenback, with the CurrencyShares Euro ETF(FXE) - Get Report moving from $110.8 the moment before the statement to $112.19 at the bell. That's the kind of monumental move that will cause tremors in most of the big European manufacturers that have feasted off our companies' weaker sales.

So, if the European stock markets were to have gone up today, it would have been a sign of irrationality, as anyone who follows the largest European exporters knows that the thing they most fear is that the dollar really is done going higher. I am sure, though, we will hear a lot of commentary from those who just endlessly press the need for a hike that Europe's bourses are down because "Yellen did the wrong thing."

That is the real nitty gritty of what happened yesterday. I think it is as simple as saying "raising numbers Procter(PG) - Get Report, cutting numbers Unilever(UL) - Get Report." The competitive advantage of the foreigners in the sector is diminishing now -- believe me, Phillips(PHG) - Get Report feels it over Dividend Stock Advisor portfolio holding General Electric(GE) - Get Report, too. If the U.S. automakers hadn't made such huge bets in China and Latin America, those would be the stocks I would say you should buy off Yellen's move.

What tends to happen, sadly, is that most people will not anticipate this change in currencies that seems to be occurring until after the companies tell them that it's changed. I think that the last reporting period saw most American companies basing their currency views on what amounts to FXE $110. I would also say that most believed that the next stop would be FXE $100.

Once the companies tell us that they are doing better from a weaker dollar, then the big move will occur. However, just like those who got into the stock market during the period of maximum Fed-head induced uncertainty, those who anticipate this move now, particularly in the currency-sensitive food and drug stocks, will make the most money.

And just like those intrepid traders who rang the register yesterday into the good news of no rate hike, when companies like PepsiCo(PEP) - Get Report and Procter & Gamble get around to saying "wow, we can raise numbers now on the stronger euro," the same smarter money will be selling, not buying.

I know, seems silly. But in the end, as I always tell you, this is a business about earnings estimates and whether a company can beat them and raise forecasts or not. Those companies that can beat and raise will most likely see stocks go higher. Those that meet will see their stocks go nowhere. And those that cut?

They are slated to go down no matter what. Which is why if you do favor higher stock prices, then you are thankful for what Yellen's Fed did -- unless, of course, you favor higher European stock prices, because in that case, she did you no favors when she did nothing yesterday.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the stocks mentioned.