"I'm not a bear, but there are some legitimate concerns in this market," Jim Cramer told his Mad Money viewers Tuesday. He said he wanted to explain some caution he recently acted on by taking more than $100,000 out of the market for his Action Alerts PLUS club charitable trust.
He said he sleeps great, but if anything did keep him awake at night, it would be these seven issues:
First, Cramer said, he's getting worried about this quarter's earnings, especially among the financials, which are priced for perfection. Cramer's second worry is inflation. At some point, he said, the rising price of oil, plastics and goods suffering from our port congestion problem could become permanent.
The third thing that worries Cramer is the ongoing stock glut. This week brings another wave of IPOs, SPACs, secondary offerings and lockup expirations that will overwhelm demand.
Read Nasdaq Sets Coinbase Reference Price at $250: Anticipation builds for cryptocurrency exchange’s direct listing Wednesday.
Next, Cramer said he's worried about COVID complacency. "We're not out of the woods yet," he said, especially with a pause in the Johnson & Johnson (JNJ) - Get Report vaccine. Fifth, Cramer's keeping an eye on his favorite market metric, the S&P Oscillator, which is now in overbought territory.
Rounding out his list of worries was the issue of continuing shortages, especially in semiconductors. Chip shortages are only worsening in the auto sector, he said. Cramer's final worry was foreign policy, where things are again heating up when it comes to China and Taiwan.
As Cramer noted in a column Tuesday for Real Money, "there simply aren't enough machines being made to create more chips, even as they are working pretty much around the clock to do so. You think that the stocks of Applied Materials (AMAT) - Get Report, KLA (KLAC) - Get Report and Lam Research (LRCX) - Get Report would be this high otherwise?"
All of these are real concerns, Cramer concluded, real enough that investors should consider raising some cash ahead of the coming correction.
Cramer and the AAP team are looking at everything from earnings and cryptocurrency to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Whether or not you're a believer in cryptocurrency, you should be a believer in Wednesday's highly anticipated direct listing of Coinbase, which will trade under the symbol COIN. Cramer said Coinbase is a great company with terrific management, but it's coming to market at the worst possible time.
The bull case for Coinbase is simple. The company is the king of the cryptocurrency exchanges with growing market share and rising trading volumes. Coinbase boasts 56 million users that account for 11% of the total cryptocurrency market. Cramer noted that a $3 trillion market cap would not be unheard of for this growing platform.
The bear case rests on the fact that cryptocurrency, as well as this direct listing, are going to be volatile. The reference price for the listing is $250, but analysts have price targets as high at $600 for Coinbase. With no lockup to prevent selling, Cramer said shares could soar, then see huge profit taking immediately thereafter.
With all new issues, the bottom line comes down to price. Cramer said he'd definitely be a buyer at 10 times sales, or $300 a share. But, at 15 times sales, or $400 a share, the stock is still attractive. He suggested investors be patient and buy very slowly, as the scarcity of stocks like Coinbase will put it in high demand, at least initially.
Executive Decision: Novocure
In his first "Executive Decision" segment, Cramer spoke with Bill Doyle, executive chairman of Novocure (NVCR) - Get Report, a company leading the charge against cancer using electric fields to disrupt tumor growth. Shares of Novocure soared 49% Tuesday after the company released positive Phase 3 trial data.
Doyle explained that the news was another milestone for Novocure. He said the data was so positive in their trial that some patients are being moved from the placebo group to the actual therapy because it would be unethical not to. This shift is a rare occurrence in trials, he said, and only occurs when the data is very positive.
Non-small cell lung cancer affects 193,000 patients a year and is one of the most serious causes of death in the U.S.
But Novocure isn't stopping at just lung cancer. Doyle noted that their therapy has proven effective with every type of cancer they've tested, Novocure is advancing trials for pancreatic cancer, ovarian cancer, gastric cancer and liver cancer in addition to their lung cancer trials.
Viewers Call In
In a special "Voice of America" segment, Cramer took calls from viewers to hear what's on their minds.
When asked about Bank of America (BAC) - Get Report, Cramer said he would hold onto this stock going into earnings season. He was conflicted on toymaker Mattel MAT, which has big plans, but a lagging share price.
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
Hot to Not
In his "No Huddle Offense" segment, Cramer pondered what happened to all of the buyers of the red-hot momentum stocks from earlier this year. He said the EVs, SPACs and the meme stocks have fallen hard in recent weeks as the buyers seemingly vanished.
Part of the move can be attributed to money managers rotating out of momentum names and into the reopening stocks. But for stocks like GameStop (GME) - Get Report and AMC Entertainment (AMC) - Get Report, which have fallen 45% and 21% respectively, the younger investors who bet big have finally given up on their dreams of easy money. Some have left the markets altogether, he said, while others are still working through the five stages of grief.
Here's what Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Tuesday evening:
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At the time of publication, Cramer's Action Alerts PLUS had no position in the stocks mentioned.