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NEW YORK ( TheStreet) -- Dropping oil prices continue to take a toll on equities, Jim Cramer told his Mad Money viewers. Investors need to keep an eye on oil futures to get a sense of where the market will move. With that in mind, here's what Cramer will be watching next week.
On Monday Honeywell (HON) provides its 2015 outlook. If the outlook is good, but the stock goes lower due to gas prices, it’s a buying opportunity, Cramer said. VeriFone (PAY) also reports after the close.
If shares of Darden Restaurants (DRI) get pushed lower on Monday, investors should use it as a buying opportunity ahead of its earnings report on Tuesday morning. 3M (MMM) also provides is 2015 outlook, but since the stock is up so much investors should do “more listening than buying,” Cramer advised.
FedEx (FDX) reports earnings on Wednesday and the conference call is a “must listen to” for investors who want a pulse on the global market, he explained. Joy Global’s (JOY) conference all is also a good tell on how the Chinese economy is doing. Oracle (ORCL) also reports earnings.
On Friday, Finish Line (FINL) and CarMax (KMX) report earnings, both of which should be bought on a pullback. He likes KMX near $54. Paychex (PAYX) reports, too, and and its conference call will shed some light on the hiring situation in the U.S. BlackBerry (BBRY) also reports earnings, but he is not a buyer.
The bottom line: Most of these companies are a buy ahead of earnings or analyst meetings. However, they need to have deeper pullbacks first, which can occur due broad-based selling related to declining oil prices, Cramer said.
Off the Charts
In his "Off the Charts" segment, Cramer drilled down on crude oil using Carolyn Boroden’s technical analysis.
Cramer said Boroden thinks there isn’t significant support until $50 to $52 per barrel. Since the rallies have been so short-lived, it means there are likely more declines in store. However, with oil prices near $57 per barrel, investors may be relieved to hear that another potential support level is at $55.67, Cramer said.
Based on Boroden’s work with timing, this bounce could come between next Tuesday and next Thursday. Unfortunately, however, any bounce is likely to be short-lived, as were the others.
If oil prices can rally more than $6.13 per barrel, a sustainable bounce could be in store for the commodity, as it may signal that an intermediate bottom has been put in, Cramer said.
The bottom line: Oil prices are locked in a steady downtrend, but support may just be around the corner. Investors should view any bounce as temporary unless it can make a series of higher highs and higher lows. Anything short of a $6.13 rally in crude prices and the commodity is likely headed even lower.
Which Oil Companies Will Fail?
Jim Cramer remained focused on crude, pointing to the unfortunate correlation between the S&P 500 and oil prices. Even worse, oil prices likely will keep falling because weak economies in Europe and China are buying less crude while U.S. producers flood the market with supply.
It seem every country but the U.S. and Saudi Arabia needs to continue producing high amounts of oil to pay their bills, Cramer said. That means highly levered oil producers will ultimately go “belly up” because prices are simply too low for these companies and their highly stressed balance sheets.
So where’s the bottom? Cramer doesn't know but he thinks that next year Venezuela, Russia, Iran, Nigeria and Libya, among other nations, will likely be forced to cut production to lower the supply. As global demand grows, oil prices should rebound. While that process will seem painstakingly slow to most investors, they need to be careful when trying buy energy stocks, which will go lower with oil.
Off the TapeIn the show’s “Off the Tape” segment, Cramer met with Matt Ehrlichman, co-founder and CEO of Porch.com, who was named USA Today’s Entrepreneur of the Year. Porch is a free platform for users, who can use the service to match up homeowners with the ideal contractor for their desired job, based on the latter’s cost and project history.
The company verifies homeowners’ reviews, shows the contractor's work and also displays what work has been done in nearby areas. It even goes through the trouble to verify that each contractor is licensed, he explained.
Porch is partnered with Lowe’s (LOW) , too, Ehrlichman said. Lowe’s is an “amazing company” that cares deeply about its customers. Business is “humming along,” but Ehrlichman didn’t reveal whether an IPO would be in the company's future.
Cramer urged his viewers to check out the Porch platform and see how this “exciting company” operates.
In the show’s “Mad Tweets” segment, Jim Cramer answered questions sent to him via Twitter at @JimCramer.
Cramer started by looking at a few stocks that required him to do some homework. He called Interexon (XON) a leader in synthetic biology and is expected to have a compound annual growth rate of 78% through 2018. The company has a proven management team and the stock is a buy on weakness.
Then there was Rockwell Medical (RMTI) , which is a now a “battleground” stock between longs and shorts, he said. The company recently received an investment from the reputable Baxter International (BAX) . If forced to choose, Cramer would be a buyer rather than a seller, but acknowledged that this a speculative holding only.
The typical Cramer advice would be to avoid stocks when they’re trading above the investors’ cost basis. Cramer said Agios Pharmaceuticals (AGIO) , Regeneron (REGN) and Isis Pharmaceuticals (ISIS) would typically be exceptions, the stocks have traded lower with oil. For that reason, wait for a larger pullback, he advised.
The last tweeter wanted to know why Polaris Industries (PII) is selling off since its customers benefit from lower oil prices. Cramer reasoned that almost all stocks are selling off as a result of falling oil and investors can buy this stock despite the oil-induced pullback.
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-- Written by Bret Kenwell