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NEW YORK (
) -- After days of brutal declines, investors finally caught a break and saw the markets break to the upside, Jim Cramer told the viewers of his "Mad Money" TV show Tuesday.
Cramer identified four keys to the market's rebound. First, he said the markets are deeply tied to the European markets. He said anytime a country is in trouble, the hedge funds and money managers head for the exits. That's why when Jean-Claude Trichtet, the president of the European Central Bank, changed his travel plans to fly back from Australia, the markets surged on the possibility of a bailout for Greece. Cramer said not even President Obama could keep them down.
Second, Cramer said the markets love a weak U.S. dollar. He said while it may seem counter intuitive to bet against your own country, money managers know that a weak dollar allows multinational companies like
to make money overseas and convert it into tons of greenbacks.
The third thing that allowed the markets to rally was oil, said Cramer. He said the markets want to see oil head higher. This too may seem counter-intuitive, he said, but high oil prices mean the worldwide economy is growing, something the markets love to hear. Oil can't be going higher if things are bad, he said.
Finally, Cramer said copper allowed the markets to rally. Copper, like oil, is a gauge on the growth of China and the rest of the world. As copper prices headed higher, so too did the markets.
Cramer said all of these catalysts are tangential to how companies here in the U.S. are actually doing or how much they're actually earning. He said they're what the markets are fixated on.
Off the Charts
In this regular segment, Cramer went head to head with colleague L.A. Little over the chart of the
Oil Services Holder
ETF, affectionally known on Wall Street as the OIH.
According to Little, the sellers have taken control of the OIH and won't stop their assault until it hits $103 a share, a $15 dive from current levels. Little noted that on Jan. 29, the OIH fell below its swing point, the level the fund last changed direction at. That swing point was set on Dec. 30, and with that resistance level gone, Little fears the OIH is headed to its next swing point of $103.
Making matters worse are signs that large traders are shorting the OIH on its way down, thus hastening its move. Cramer said most retail investors can't take a sharp decline, and will also sell on the way down, furthering the move.
Little noted that if the OIH holds its $103 level, he may turn positive on the OIH, but if not, the fund could fall to as low as $85 a share.
Turning to the fundamentals, Cramer said there's not much to save the oil services stocks at the moment, and he'd simply get out of the sellers' way and sell the OIH if he owned it.
He said a better play the group would be to own the best company in the OIH, and that's
. He noted that Schlumberger is 10 points off its high, just reported a great quarter and has lots of business still to be done in Iraq.
"I'd sell the OIH and buy some Schlumberger once the OIH hits that magical $103 level," he concluded.
"A company that can raise its dividend by 20% is telling you things are going really good," Cramer told viewer, as he recommended
as the next in his series of dividend boosting stocks worth owning.
Core Labs helps oil companies assess the size of oil deposits and manage the production of those deposits. The company derives 80% of its sales from crude oil services and the remaining 20% from natural gas. Cramer said investors should think of Core Labs as a technology company that plays in the oil sector.
While Core Labs currently only yields 0.3%, Cramer said what's impressive is that the company boosted its dividend 20% last month from 10 cents a share to 12 cents. The company also has a long history of paying out special dividends, which would take Core Labs' yield to just over 1%.
Cramer said he's not focusing on high-yielding stocks this week, but rather ones where business is going well enough that the company can raise its dividends, the ultimate sign of strength. Cramer said he would not chase Core Labs ahead of its quarterly results on Thursday, but would wait and listen to the conference call before buying into what he called a solid performer.
Cramer said there is a sea change happening in the minds of American consumers. He said there is no longer a stigma attached to private label consumer goods, and consumers aren't flocking back to name brand items now that the worst of the recession is behind us.
Cramer said with private label brands en vogue, investors need to invest accordingly, which means selling name manufacturers like
Cramer said the smarter money will be in private label manufacturers, companies like
( RAH) and
American Italian Pasta
"People are tired of being fooled by expensive brands that are no better than the cheaper, unbranded one," Cramer concluded.
Cramer was bullish on
He was bearish on
Northern Dynasty Minerals
-- Written by Scott Rutt in Washington D.C.
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At the time of publication, Cramer was not long any stock mentioned.
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