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Does the stock market just feel bad lately? If you think so, you're not alone, Jim Cramer told his Mad Money viewers Monday. In fact, Cramer told viewers that if the market isn't making them cautious, they're either arrogant or clueless.
If it feels like the markets are struggling to to stay above water, that's because they are, Cramer continued. Only 23% of all stocks are currently above their 200-day moving averages. Making matters worse, the stocks that are higher are significantly higher and are due for a correction.
There are still a few things that Cramer likes about the market. He noted that as the number of stocks on the move gets smaller, more and more investors pile into them, making them self-fulfilling prophecies. Then there are falling commodity prices, which eventually will translate into lower prices and better earnings for many industries.
But until then, Cramer urged caution because the markets are still solely focused on the Federal Reserve and the Fed's statement later this week holds the key to the direction of many sectors.
Executive Decision: Michael Polk and Martin Franklin
In his "Executive Decision" segment, Cramer sat down with both Michael Polk, president and CEO of Newell Rubbermaid (NWL - Get Report) , and Martin Franklin, founder and executive chairman of Jarden (JAH) , to discuss the two companies' merger plans, officially announced Monday.
Polk said the combination of the two companies comes from a position of strength. Newell Brands, which will be the company's new name, will have products in virtually every aisle from sporting goods to household appliances. The synergies will allow Newell to lead the categories it is in.
Franklin said his role at Newell is only just beginning and he will be on the board of directors as well as be the company's largest shareholder. He said the efficiency of the combined company will make it a great story for years to come.
Turning to the companies' many brands, Polk said there will be synergies between Graco and Nuk in the baby aisle and with Rubbermaid and FoodSaver in your kitchen, among many others.
Avoid This Lulu
What should investors do with the stock of Lululemon Athletica (LULU - Get Report) , the yoga-apparel maker that delivered everything the bears expected when it reported last week, earnings that sent shares plunging by 13%?
Lulu missed earnings by 2 cents a share but did post a 9% increase in same-store sales along with a 14% year-over-year rise in top line revenue. With shares now down 14% for the year, Cramer thought the company was worth a second look.
Cramer found Lulu a mixed bag. The company is indeed having inventory troubles, which are a big red flag, but Lulu also fell victim to the West Coast port strike, from which it is only now recovering. The company also has a contracting gross margin problem that has yet to be resolved.
All of that might make for an interesting speculative investment, Cramer noted, except for the company's valuation, 26 times earnings, which just makes it far to expensive to bet on, even for a potential takeover.
Cramer's conclusion: Wait for a much better price or don't buy it at all.
Despicable Third Avenue
"Despicable and a travesty." That's how Cramer characterized the Focused Credit Fund of Third Avenue Management, the firm that unilaterally and inexplicably blocked redemptions of its mutual fund last week after announcing its value fell by 27%. Third Avenue's CEO was then promptly fired.
Cramer said there are laws that allow mutual fund investors to pull their money out at any time, and Third Avenue's actions to prevent everyday investors from doing so are simply inexcusable.
Even worse, Cramer said he examined this fund's 54 investments over the summer and found only 12 of them worthy of the name "investments." He said the combination of these high-risk assets screams of pre-recession thinking, It's clear these fund managers had no understanding whatsoever of what they were doing.
Cramer said many of the assets on Third Avenue's books are likely worth a lot less than the 27% loss they indicated, with many likely worth half or less of what they paid.
High-yield funds invest in "distressed paper" by their very nature, Cramer concluded, but compiling a portfolio like Third Avenue left investors with little chance of survival.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer declared that the price of oil is once again in charge of the market, even if it really shouldn't be.
Cramer noted the futures markets seem to be trading in lock-step with the price of crude, even though there are only 16 oil-producing states in the U.S. and of those, only North Dakota is truly negatively impacted by falling oil prices.
So why are the markets so focused on oil? It's because of all the debt the oil companies have racked up, Cramer explained. Even though the housing bubble in 2008 had defaults 20 times that of what the oil companies may eventually default on, the markets still remain worried.
Correlations matter, Cramer concluded, even if they don't make sense.
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