- Apple's breakout;
- why names like Caterpillar will continue to rise despite China's rate hike; and
- why U.S. markets are bucking overseas weakness.
Apple Foils the Doubters Once Again
Posted at 10:58 a.m. EST, Tuesday, Dec. 28 For those who had simply given up on Apple ( AAPL) because it couldn't take out the high, the question is now moot. The problem with Apple and with so many other stocks this year has to do with failed breakouts that turned into true breakouts and multitudinous heads and shoulders that turned into reverse heads and shoulders. Apple is no exception. This is the year when technical analysis played hit or miss. So often I have had emails and callers saying that Apple is failing so we have to sell Apple and that the failure shows that all of those iPads sold and all of the iPhones purchased were overstated or that there was so much "good news" in the stock that it couldn't rally past this level. > > Bull or Bear? Vote in Our Poll To those who say that, I say, "Now what?" What happens if it turns out that everything's as good as we thought and that people who bet against the stock because of the failures ended up just plain wrong, as I think they will be proven? The breakout could launch Apple in the way that so many of the fastest growers took off once they passed their tops. Apple could go up dozens and dozens of points before it even approaches the value of the rest of the FADS CAN stocks. And I think it is going there. At the time of publication, Cramer was long AAPL.
China's Rate Hike Was Just a Speed Bump
Posted at 5:55 p.m. EST, Monday, Dec. 27 You can't have a second tightening tonight in China, and that makes me pause and think that the return to the cyclical trade could start again tomorrow. No matter what, despite strong copper (how many here have doubted that metal?) and a weakened dollar, there's no way the Caterpillars ( CAT), Vales ( VALE) and Cummins ( CMI) can be up the day after a tightening. But the pattern has been one-day selloffs of the Caterpillars and then a re-affirmation and resumption of the rally.
Why the U.S. Markets Buck the Global Tide
Posted at 2:06 p.m. EST, Monday, Dec. 27 Three theories to the strength in the face of the obvious weakness that should have happened. First, the mechanics of the game: powerful forces meant to preserve gains went right to work, staving off what should be some pretty heavy losses for the Chinese-related cyclicals. Since almost everyone has gains in these stocks, there's no reason for big mutual funds or hedge funds to let them dissipate. So they are being kept up unnaturally. Second reason: the Chicago Fed's Midwest Manufacturing Index showed steady improvement. Given that there is a dearth of big news coming out, this report could actually have an impact, and it does show less dependence on China for a turn in the economy. Finally, the market has a very hard time getting hammered when the banks act well. We are still, after all these years, conditioned to believe that this group, not tech, not oils, can buoy the market on its own or at least keep it out of trouble. If that's the case, there are plenty of catch-up names to be played, including Action Alerts PLUS names PNC ( PNC) (should be much higher) and Bank of America ( BAC), as well as Citigroup ( C), U.S. Bancorp ( USB) and Wells Fargo ( WFC). All are U.S. cyclicals (except for Citigroup which is global) that are so far behind the market that they can be bought without worry of profit-taking between now and Friday. Just a thought or three to explain this highly unnatural strength in the face of global weakness. At the time of publication, Cramer was long PNC and BAC.