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The markets last week were dominated by the Federal Reserve, oil prices and China, Jim Cramer told his Mad Money viewers Friday. Investors should expect more of the same this week.
Cramer said that on Monday he'll be listening to the earnings from Halliburton (HAL) - Get Report for the latest on U.S. oil production, along with Kimberly-Clark (KMB) - Get Report and McDonald's (MCD) - Get Report , both of which he expects to post solid earnings.
Next, on Tuesday, it's Freeport-McMoRan (FCX) - Get Report reporting, along with Johnson & Johnson (JNJ) - Get Report , Procter & Gamble (PG) - Get Report and Apple (AAPL) - Get Report , a stock Cramer owns for his charitable trust, Action Alerts PLUS. Cramer said Freeport is holding on by a thread and he's not expecting anything good. Johnson and Procter can be bought on weakness, however, while Apple should just be held for the long term.
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Wednesday brings a new statement from the Fed, which will likely overshadow earnings from Boeing (BA) - Get Report , Norfolk Southern (NSC) - Get Report , United Technologies (UTX) - Get Report and Facebook (FB) - Get Report , another stock in the Action Alerts PLUS portfolio. Cramer is bullish on Boeing, United Technologies and Facebook on any weakness.
The earnings parade continues on Thursday with Bristol-Myers Squibb (BMY) - Get Report , which Cramer said has never let us down, and Caterpillar (CAT) - Get Report , which always lets us down. Those earnings will be followed by those from Under Armour (UA) - Get Report and Amazon (AMZN) - Get Report , two stocks Cramer said you should never bet against.
Finally, on Friday, American Airlines (AAL) - Get Report will be the highlight, with Honeywell (HON) - Get Report , MasterCard (MA) - Get Report and Newell Rubbermaid (NWL) - Get Report also reporting. Cramer is bullish on all of them.
The fundamentals and the market are once again diverging, Cramer told viewers. But there is at least one way Friday's strength could turn into a meaningful rally.
Cramer explained there are a few key trends gyrating in the markets right now. The first is the strong U.S. dollar is becoming the new normal. This time last year, companies were able to downplay the dollar, offering their actual earnings vs. those they would've seen on a "constant currency" basis. But no more, Cramer said. Bad earnings are now being treated as bad earnings.
Then there's oil. The sudden rise in oil prices just proves that oil fell too far, too fast. It does not mean that supply is weakening, or that oil companies won't need to issue more equity to stay afloat.
Finally, there are earnings, which at least so far are mediocre at best. From a slowdown at General Electric (GE) - Get Report to the implosion at American Express (AXP) - Get Report , there really isn't anything to get excited about.
So with all these negatives, how can the markets possibly sustain the positive momentum it saw Friday? Cramer said only the way is if the Fed changes its narrative on Wednesday, back to "data dependent." That would relieve pressure on the dollar, boost earnings and help buoy stock prices.
Auto Sales Hit Skids
Has the U.S. hit peak auto sales? There are signs pointing to yes, Cramer told viewers, as he looked into the big declines of AutoNation (AN) - Get Report , down 23%, and Carmax (KMX) - Get Report , down 15%, so far in 2016.
Cramer noted that things have been pretty rosy for the auto industry of late, with U.S. car sales of 10.4 million in 2009 ramping steadily to 17.4 million last year. But things started to get shaky late in 2015 after Carmax reported only in-line numbers in June, with even weaker results in September and December.
Meanwhile, things were declining at AutoNation, which sells new and used cars. AutoNation saw a 6% decline last quarter, indicating that as demand is weakening, prices are being cut and the company is making less money on every sale.
Cramer said these two companies raise the caution flag for the rest of the auto industry because used car sales are typically a leading indicator. Cramer remains bullish on General Motors (GM) - Get Report but little else in the auto sector.
Executive Decision: Sheri McCoy
McCoy said Avon has a great transformation plan. The company received $435 million from Cerberus Capital and now has the funding, resources and focus to expand its international markets, where it remains in a leadership position.
When asked about what went wrong in the U.S., McCoy explained Avon was slow to innovate, both with new products and ways to interact with its customers. Avon is now investing in its online operations and in social media.
Avon has more than six million active representatives, and McCoy said she still believes strongly in the products and in the opportunity Avon provides to women around the globe.
In the Lightning Round, Cramer was bullish on Nordic American Tanker (NAT) - Get Report , EPR Properties (EPR) - Get Report , Cisco Systems (CSCO) - Get Report , Regeneron Pharmaceuticals (REGN) - Get Report , Altria (MO) - Get Report , Ventas (VTR) - Get Report and Radius Health (RDUS) - Get Report .
No Huddle Offense
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Cramer said Starbucks delivered spectacular earnings, with a 9% increase in same-store sales, stunning packaged goods performance and 15% earnings-per-share growth. But naturally, investors focused on the negatives: softer sales in Europe and a slowdown in growth in China from 6% to 5%.
Yet Starbucks CEO Howard Schultz said that all of Europe declined after the Paris attacks, and Starbucks has returned to pre-attack levels. While in China, Schultz is taking a long-term approach, noting that the middle class in China is more empowered every day.
It's time to start trusting Howard Schultz, Cramer concluded. Every time the stock's been weak, Schultz has made you money.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, CSCO, FB and SBUX.