Stop worrying about the shape of the recovery and stay focused on the size of the decline, Jim Cramer cautioned his Mad Money viewers Tuesday. While the possibility of a second Great Depression may be fading in the distance, our economy isn't out of danger yet.
It's still possible that we've not seen the bottom of this economic drop and millions more layoffs are still ahead. That means investors must stay vigilant, investing in companies that thrive in the new COVID-19 world. Facebook (FB) has proven itself a winner, with a renewed focus on small business. Apple (AAPL) and Netflix (NFLX) remain crowd favorites. Finally, there's the king of stay-at-home stocks, Amazon (AMZN) , which has rallied 32% for the year.
Cramer said he was encouraged by Walmart's (WMT) comments signaling pent up demand and suggesting that perhaps April was the bottom. But while oil has bottomed and the financials are not seeing sizable defaults, much of the market's recent rally has been fueled by hopes of a vaccine. That vaccine is likely still a long way off.
Cramer and the AAP team are looking at everything from earnings and tariffs 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.
Reward Small Business
Small business has been billed as the backbone of the U.S. economy, and for good reason. While big business is focused on cutting costs and boosting their bottom line, small businesses tend to spend and keep lots of people employed.
But in a world of layoffs and quarantine, the backbone of America isn't getting ripped out, it's just moving online. Cramer said there's a growing wave of micro-businesses blossoming, ones that use Etsy (ETSY) Shopify (SHOP) and Wix (WIX) to sell artisanal goods direct to consumers and deliver them right to their homes.
This trend may still be small today, Cramer said, but it's catching on as small businesses shift from stores to online to avoid landlords and unnecessary overhead. Cramer told viewers to keep their eye on this underreported segment of our new economy.
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Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Carolyn Boroden for the latest read on where the markets are heading next. Boroden correctly warned the markets were vulnerable in February and called the March lows a month later.
Using a daily chart of the S&P 500, Boroden saw a mixed picture, with the average needed to pass a ceiling of resistance at its 200-day moving average around 3,000. If the index can clear that ceiling, Boroden's price targets were 3,720 and 4,136. She cautioned that investors need to be ready to sell, however, if the breakout doesn't occur.
The daily chart of the Nasdaq painted a stronger picture, with the index already above its 50-day and 200-day moving averages. Boroden's price target was 9,489, but here again, if we fail to rally and decline below last week's lows, it will be a bearish sign.
The Dow Jones Industrial Average and Russell 2000 followed similar patterns, with several ceilings needing to be cleared in the short term before a continuation of the rally is possible. Boroden urged caution if the major averages cannot rise above these key resistance levels.
Executive Decision: Ping Identity
In his first "Executive Decision" segment, Cramer spoke with Andre Durand, CEO of Ping Identity (PING) , the cybersecurity company with shares that are up only slightly for the year.
Durand explained that Ping provides identity management services for 60 out of the Fortune 100 companies, allowing employees to access their company's network from any device no matter where they are. Ping Identity connects the users to the right applications even when they're working from home.
Ping Identity was born in the enterprise, Durand added, which means they're focused on scale, performance and security for customers that have hundreds of millions of transactions per day. Ping provides these enterprise customers with mission critical functionality as well as the tools they need to secure and manage their network assets.
When asked whether the work-from-home trend was here to stay, Durand said Ping Identity has always believed that remote work was a growing trend and this pandemic has only accelerated that.
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Executive Decision: Five9
For his second "Executive Decision" segment, Cramer also spoke with Rowan Trollope, CEO of Five9 (FIVN) , the contact center provider with shares hitting new all-time highs this month.
Trollope explained that Five9 is a digital platform that connects businesses to their customers via chat, SMS and telephone. The system is web-based, which makes it flexible for agents to work from home or from anywhere.
At a time when many businesses have their physical locations closed, Five9's platform acts as the new front door. Many companies are finding that this new digital front door provides a better experience than the old way.
Trollope said when Five9 surveyed their customers, 75% said they planned to continue to leverage remote workers after the pandemic. They found Five9's solutions cheaper, more flexible and gave them access to better talent given they were no longer constrained by their local geography.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening:
Aptiv (APTV) : "This is too close to auto and I'm not recommending anything close to autos."
Elastic (ESTC) : "There are so many of these companies."
Domo (DOMO) : "I like this story."
Dave and Busters (PLAY) : "No, I'm not recommending anything food and dining with this pandemic."
Credit Acceptance Corp. (CACC) : "No, if you don't like autos you can't like auto financing."
Athersys (ATHX) : "That's a good company and a good stock."
Dropbox (DBX) : "I thought they had a good quarter and I'm going to say yes to it."
Ventas (VTR) : "Senior living is tough right now. That is not something I want to invest in."
Walt Disney (DIS) : "I'm just going to own it for the long term. "
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At the time of publication, Cramer's Action Alerts PLUS had a position in FB, AAPL. AMZN, DIS.