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"We have too much of pretty much everything in this market," Jim Cramer told his Mad Money viewers Tuesday. "That's why the urge to merge is growing on Wall Street."
And that's why shares of Hershey (HSY) plunged after Mondelez (MDLZ) walked away from its bid for the company. In the food business, growth is hard to come by, which is why getting a takeover bid and then losing it matters a great deal. Companies would much rather merge than fight with each other.
In the retail sector, we also have more than we need. As Macy's (M) CEO Terry Lundgren noted after announcing the closure of 100 stores, the U.S. has 7.3 square feet of retail space for every citizen, nearly 5.5 times as much as in the UK or Japan.
Perhaps the only sectors not looking to merge are the rails and the airlines, which have done about all they can do when it comes to consolidation. Same with the banks, which are as big as regulators will allow.
Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Robert Moreno over the chart of Chipotle Mexican Grill (CMG) , now that a full year has past since the company's spate of health scares that send shares plunging from $750 to as low as $395 a share.
Moreno liked Chipotle's weekly chart, noting that the stock's floor of support at $395 has held and shares appear to be poised to break above their downtrend line that has been acting as a ceiling of resistance. With the MACD oscillator signaling a bullish divergence, Moreno felt that if shares hold above $420 it would be huge for the stock.
Moreno was further bolstered by Chipotle's relative strength indicator, which has been moving up rapidly in recent weeks, and the vortex indicator, which has just flashed a bullish crossover.
How high could Chipotle run? Moreno felt $600 a share would be possible over the longer term once shares break free from their downtrend. Cramer concurred, saying that in other health scares most restaurant stocks begin to recover between 12 to 18 months after the incident has passed.