Are investors right to be angry with the management of Walgreen (WAG), Allergan (AGN) and Time Warner (TWX) for recently making decisions that sent their shares plummeting? Cramer told viewers the answer depends on whether you're investing for the long term or the short term.
Cramer explained that Walgreen opted not to move its tax status overseas, even though it's perfectly legal for it to do so, because the company didn't want to become the poster child for negative financial engineering. Meanwhile, Allergan's management rejected a hostile takeover bid because it felt that over the long term the company is better off going it alone. The same applies to Time Warner, he continued.
All three CEOs believe their decisions are right for their company over the long term, even if that means shareholders must endure some pain in the short term. But in all three cases, shares ran up in anticipation of the events. If you didn't take profits when you had them, well, that's on you, Cramer concluded, and not on management. You can't blame management for doing what's right over the long term.
ChartWeek: J.C. Penney, Deckers, Michael Kors
Fitzpatrick said Penney's daily chart shows the stock trading in a tight range for months, making new lows but on lighter and lighter volume. The stock's weekly chart displays a reverse-head-and-shoulders formation, which is bullish, leading him to recommend building a position now.
Fitzpatrick also liked the chart of Deckers, noting the daily chart with a cup-and-handle formation, close to its 50- and 200-day moving averages. With the stock drifting higher, Fitzpatrick said he was bullish on Deckers.
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Fitzpatrick was not as optimistic on Michael Kors, however, as the stock has been responding to good news with lighter and lighter volume, indicating that shares are quickly running out of steam and are poised for a correction.