Jim Cramer shares his views every day on RealMoney. Click here for a real-time look at his insights and musings.
Cramer: Give the Bull a Break, It's Taking a Breather
Posted at 4:20 p.m. EDT on Thursday, June 9, 2016
Taking a breather. That's about all I can say about a market that's been so strong that it deserves to sit down for a couple of plays.
The question is, how many plays?
We've been in a benign market for a bit now. That's because we have seen decent demand for commodities -- a sign of worldwide growth -- while the Fed is on hold because of domestic weakness.
There's only one problem with the benign market. You still have to feed the bull, and there's just not enough news flow to move the needle.
Think of it like this. We had one good earnings report from uber-Cramer fave J.M. Smucker (SJM - Get Report) and that's a function of very strong K-cup sales, decent Dunkin Donuts K-cups and the continuing greatness of the Big Heart pet food acquisition. The company's earnings report stunned analysts and was literally 56% better than what people were looking for. That's phenomenal.
But what do you buy off of Smucker? Blue Buffalo Pet Foods (BUFF) ? It's already up 36%. Dunkin' Donuts (DNKN - Get Report) ? Nah, they don't correlate. Keurig, mysteriously taken private by an outfit called JAB that coveted its Kold brewed product that ended up bombing? Smucker is about as devoid of pin action as they come.
Or how about Restoration Hardware (RH - Get Report) ? The stock, down $7-plus because of a myriad of mistakes involving horrendous execution and botched catalog shipments, had little redeeming to us. In fact, it was as bad -- analysts were looking for $2.66 for the year but the company guided down to the buck-sixty to buck-eighty range -- as Smucker was good.
But what looks like Restoration? Not much, as its stores are ethereal and its merchandise expensive as all get out. Traders took down Williams-Sonoma (WSM - Get Report) simply because it seems like Restoration even as it reported an excellent quarter three weeks ago. Believe me when I say that nothing's changed at Williams-Sonoma in the past few weeks.
So we do the check-down. First, there's oil. It looks like the $50 area is not going to go quietly as oil fell 58 cents back to $50.64. Oil is the most important gauge of this market and an oil decline pretty much eliminates any upside. Friday, we get the Baker Hughes (BHI) rig count, and I think you have to be ready for oil to go down after we see more rigs coming on -- something that happens when the $50 breakeven for many U.S. companies kicks in.
Natural gas, unlike oil, has been strong, so the energy companies from that segment -- notably Cabot Oil & Gas (COG - Get Report) , Southwestern Energy (SWN - Get Report) , EQT (EQT - Get Report) and Range Resources (RRC - Get Report) -- all zoomed. But I wouldn't follow that buy unless you thought we were going to have a bunch of very hot days that would burn a lot of nat gas.
How about the dollar? Wrong way. Stronger. That's not good for the numbers. Only Johnson & Johnson (JNJ - Get Report) and Honeywell (HON - Get Report) seem to be able to buck the trend of the big multinational decliners as they need the dollar down. What can I say about those two? They are remarkable. Alex Gorsky, the CEO of JNJ, and Dave Cote, the CEO of Honeywell, are the two CEOs who have spent the least amount of time hiding behind the strong dollar, even as much of their business is overseas. They just do the numbers anyway.
Nike (NKE - Get Report) is having a rare up day. But then again, the Cleveland Cavaliers, led by the Nike-wearing LeBron James, could be one-off, too. The Cavs are a proxy for Nike, and Stefan Curry, the wearer of Under Armour (UA - Get Report) , is the proxy for that stock, so this NBA finals has historic stock performance precedence, at least for these two.
Speaking of one-off, Valeant (VRX) -- the term the word "beleaguered" was invented for -- was able to rally a point. I continue to believe that the real problem with Valeant isn't the dramatic overpay for a woman's libido pill that was subsequently written off or about the endless price gouging that CEO Joe Papa told us had to be rolled back. It's about the competition, Allergan (AGN - Get Report) and JNJ, taking business away from a company in disarray.
How about the bonds? They were too strong Thursday, with rates falling too far. We know that means to bang the banks down, and that's just what happens. It's awfully hard to mount a huge rally without the banks. No Fed pop-offs and gasbags talking today. What a relief.
We've got a bunch of one-off follow-throughs. There's Lululemon (LULU - Get Report) , which reported an amazing quarter and showed you that retail isn't dead -- it's just that you can't do yoga positions such as child's pose in Ann Taylor or Plank in Victoria's Secret.
Ralph Lauren (RL - Get Report) is continuing to rally after the stock market got that initial restructuring dead wrong. CEO Stefan Larsson is taking the same tough-love approach that Manny Chirico had to take with PVH (PVH - Get Report) , and now he's picking up the respected CEO from Coach (COH) . I continue to like the story.
Finally, there's the stock that everyone now seems to love to hate: Apple (AAPL - Get Report) , which is part of our Action Alerts PLUS portfolio. I got to talking about Apple with my daughter this weekend over a delicious lunch at Olive Garden in East Hanover on Ten in Jersey. I was distraught, having forgotten to wear my cargo pants so I could stuff all those fabulous rolls in my extra-large pockets. She was happy as a clam because she's a vegetarian, and that unlimited salad bowl is right up her alley.
Anyway, she's getting interested in the stock market, and she asked me how Apple's stock is doing, and I said it's been stalled out, doing nothing. In fact, I said to her, why don't we go to the Short Hills Mall to the Apple store because I need a new watchband. I showed her mine and how it was time to get a different one. She wholeheartedly agreed it was time for a new one. But she said forget about going that day. It will be too crowded.
I said that's totally ridiculous. It's in a mall. The mall is dead. It's empty. Nobody goes there anymore. She said, ''We can't go, we don't have an appointment." I told her that was ridiculous, we can just go in and speak to someone and get some help.
"No way. Let's not even waste our time."
I told her when was the last time she had been to a store, and that everyone except her father says that Apple's best days are behind it.
She threw her hair back and laughed: "I was there just last week. You can't get in."
Well, isn't that the Apple story in a nutshell? Maybe someone else has been to the Short Hills Mall, didn't have an appointment, couldn't get help and instead bought the stock? Maybe that's why it is up Thursday.
So, without a doubt, it's a dull one. Nothing to trade off of. Nothing to make a case for. Just real dull despite big rich guys like Carl Icahn and Jeff Gundlach and now George Soros telling you how dangerous as all get out stocks are.
I learned early on, "Never short a dull market." As this may be the most dull market I have seen in ages, what can I say -- the thing is resting, working off all of that bullishness, and nothing more, or less for that matter.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.
Cramer: The Ultimate Oil Contra-Indicator Has Spoken
Posted at 7:05 a.m. EDT on Friday, June 10, 2016
Hamm was on CNBC Thursday talking about oil at a turning point and how it was ready to go to $69-$72 from $49.
Oh boy, I said to myself. That's why oil's going nowhere. As my writing colleague Matt Horween pointed out to me, Hamm is the ultimate contra-indicator.
When oil was at $80, going to $25, Hamm came on Mad Money and predicted that oil was about to go right back to $100. I remember it because I had Charif Souki, the now-deposed former CEO of Cheniere Energy (LNG - Get Report) saying the exact opposite and that oil belonged substantially lower, perhaps $60 or lower.
Charif talked about how traditional oil people do not have marketing departments. They don't say "you know what, we can't really market that product right now." Instead, they keep pumping and pumping.
That's exactly what Hamm did, and it was totally wrong. His company was among the biggest losers during the downturn, losing hundreds of millions of dollars.
He is the last guy I would follow on this issue.
Not only that, but he indicated that he was ready to start pumping again. With oil at $50 "we will complete wells that have not been completed," he told CNBC, meaning that this price is where the company has a chance to make money on the new oil, although he did say that he isn't going to start using new rigs to drill.
That's cold comfort. Hamm's doing what a lot of other oil execs are doing: starting production again which, in itself, is self-fulfilling. You can't get oil to go higher from here if that's the mindset.
More important, it shows that these guys never learn. What the heck is Hamm doing still predicting the price of oil, given that he's been so unbelievably off base? He has been so optimistic that you simply have to bet against him.
Given that oil is all that matters in this market and oil's down, we can rest assured that it's going down because of comments like Hamm that the U.S. is about to turn on the spigot again. That will encourage the Saudis to pump more to stop the price, and we can begin to see oil go back to the lower forties if this madness continues.
That means we have to be very careful, as oil is what the algorithms are set on. Lower oil means lower stock prices. Harold, my advice, if you turn on the spigot, start the stock selling.
You won't regret it. Forty-three, up from $13 back in January is a nice move for this stock, regardless where it started. Ka-ching, ka-ching.
Action Alerts PLUS, which Jim Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.