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Earnings are all about the "setup," or the narrative being talked about just ahead of earnings season, Cramer explained. The setup this quarter has been all about Donald Trump's tax cuts and deregulation plans. But deregulation might take longer than some investors think, and that's bad news for the banks that are starting to fade as interest rates peak, at least for the short term.
Then there's health care, a sector bolstered Monday by Ariad Pharmaceuticals' (ARIA) $5 billion bid that took shares up 72%. Cramer said this sector needs to have its enthusiasm tempered. With crude oil falling by 4% today, the oil stocks are also vulnerable for a pullback, Cramer noted.
Perhaps the only stocks Cramer was bullish about today were Procter & Gamble (PG) and Coca-Cola (KO) , both of which saw shares fall on an analyst downgrade. Cramer said he still likes the dividend yield and the longer-term outlook for both companies.
Beyond Dow 20K
Can the Dow Jones Industrial Average really hit 20,000? Cramer said that's the wrong question to be asking. The right question is, "Can the Dow move beyond 20,000?"
There are 12 stocks that are well off their all-time highs, Cramer said, and he looked into which ones have a shot at regaining their former glory. He said that it's difficult to see how Walmart (WMT) could rise 30% to its all-time highs, but American Express (AXP) could vault 27% on multiple expansion alone. Meanwhile, it's questionable that IBM (IBM) , Nike (NKE) or Caterpillar (CAT) have a clear path to their former highs.
Cramer was bullish on Apple, however, and said that Cisco Systems (CSCO) , another Action Alerts PLUS name, could rally if it reports a good quarter. He was also upbeat on Walt Disney (DIS) but said United Technologies (UTX) has given about all it can.
The good news, Cramer concluded, is that all of these stocks have been at their highs before. But that doesn't mean there's a clear path for them to get back there now.