If anything moves the market in the week ahead, it's going to be this - the yield on Treasurys. So says Jim Cramer.
In fact Cramer thinks movements are going to be so important he wants you to regularly check the TNX, which tracks the yield on 10-Year government bonds, the most influential of all the rates right now.
Because Wall Street is so afraid of the ripple generated by higher rates "when the TNX goes up, the stock market will likely go down," Cramer said. That's all there is to it.
That begs the question - what could drive rates? Following are the earnings reports, economic data and other events that Jim Cramer will be monitoring in the week ahead.
MONDAY JUNE 24TH
On Monday Jim Cramer will be listening closely for hawkish Fed speak as Dallas Fed President Richard Fisher delivers an address at the Official Monetary and Financial Institutions Forum. "If there's anyone who can propel the TNX higher and the stock market lower, it's Fisher," Cramer said. "He's been a one man wrecking crew for stocks. Fisher's the biggest hawk in the world. Please, be very careful and mindful of what Fisher's comments can do to the stock market."
TUESDAY JUNE 25th
On Tuesday the health of the housing market will capture Cramer's attention with the latest reading from the Case-Shiller housing index. "One of the proximate causes of this whole decline is that the housing market got too hot to keep mortgage rates as low as they've been. So if we see a further increase in home prices from this index, I suspect the dreaded TNX will roar and stocks will get hammered again," Cramer said.
Also Cramer said data on new home sales is scheduled to be released at 10am and for stock investors it could be a lose-lose situation. "If it's too hot, traders might sell stocks because the Fed won't keep rates down. And if it shows new home sales are cooling, traders could pummel the sector."
Cramer also intends to dig down into the market with earnings from Carnival Cruise. "While there apparently have been no new instances of mishaps on the high seas, I think this one's become a free firing short zone."
In addition Cramer will be looking at retail with Walgreen earnings. "I like this stock very much, and if it gets hit on Monday, I'd snag some ahead of their earnings report Tuesday morning," Cramer said.
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WEDNESDAY JUNE 26TH
Cramer will take the pulse of what he calls the 'real economy' on Wednesday with a slew of earnings. "Paychex reports and I'd like to hear about more small business hiring to get more confident that the economy is truly strengthening in a sustainable way, as Bernanke implied."
"Meanwhile, Bed Bath & Beyond gives us its earnings Wednesday night. They might give us a sense of how much people are spending on their homes, another driver of the economy," cramer said.
Also, it's been a rough couple of weeks for the consumer packaged goods names," Cramer added. "I want to hear what General Mills says when they report earnings."
THURSDAY JUNE 27TH
Again the health of the 'real economy' comes under Cramer's microscope with earnings from McCormick and ConAgra. "We'll find out if this group can respond to good numbers, or if it's totally hostage to interest rates. I bet if the TNX goes higher, it might not even matter what these companies say, their stocks will go down anyway," Cramer said.
Also Cramer will be sifting through earnings from Nike and Accenture. "Nike's been strong in the U.S. but weak in China, and I have to tell you I want no Chinese exposure so I would sit this one out. Accenture has done a superior job despite the headwinds of Europe—one of many reasons why I like this terrific international consulting play."
FRIDAY JUNE 28TH
On Friday, smartphones come into play with results from Blackberry. "I'm a buyer of this stock if it's trading at around $12 going into the report, and I'm a seller if it's trading at $15 before the news. At $12 you have a cushion if they disappoint, at $15 you're vulnerable," Cramer said.
Also the state of the economy comes right back into focus with the Chicago PMI. "If this crucial industrial indicator is at all strong, then I think, once again, that interest rates will rise and the stock market will fall."
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