Considering the conflicting price action, investors are looking here, there and everywhere for clues about the market's next big move
With earnings season picking up momentum in the days ahead, pros such as Jim Cramer think the deluge of quarterly reports expected next week will provide key insights into whether the bulls or bears win this current tug of war.
Following are the earnings that Jim Cramer will be watching closely.
MONDAY JANUARY 20
MLK Day – Stock market is closed
TUESDAY JANUARY 21
"Suffice it to say that I'm a tad concerned because both companies have become victims of heightened expectations," Cramer said. "Delta has been quite vocal about how well it's doing and hardly a day goes by without Johnson & Johnson receiving praise from the Wall Street analysts who cover it. If Delta goes down after the quarter, perhaps you should pick up some American Airlines if it's down in sympathy, because I think the hype is much less of a factor there."
After the close Cramer's attention will shift to big blue. "IBM reports earnings," Cramer noted. "I think the company needs to lay out a very positive view of 2014 to get back on track. The only reason this stock isn't even lower is Warren Buffett. He bought a ton and has embraced it wholeheartedly.," Cramer said
WEDNESDAY JANUARY 22
Retail will dominate on Wednesday with earnings from Coach. "Talk about diminished expectations. Does anyone expect anything terrific to happen at Coach. Frankly I don't think so. I'd be careful here," Cramer said.
Also Cramer will turn attention to rails with earnings from Norfolk Southern. "This one's tough but I'm inclined to think it hasn't fallen far enough to match the potential newfound weakness in coal," Cramer added.
However, if you're looking to put money to work, Cramer suggests watching United Technologies. "The the company has already tempered expectations at a talk it recently gave. When you have tempered expectations for a company that's as levered to aerospace and commercial construction as United Technologies is, I think you've got a terrific set-up for higher prices."
After the close, Netflix will land front and center. "This stock has had such a huge move that I think it's vulnerable to a big decline unless everything is perfect. Here's the good news, though. Netflix has a history of getting hammered immediately after it reports. That might be your opportunity to buy, as long as it doesn't say that newfound competition is hurting sign-up in its release," Cramer said.
Also Cramer will be watching eBay on Wednesday. "Here's a company that's had multiple firms say negative things about its growth, and yet its stock hasn't fallen accordingly. I typically do not like those set-ups," Cramer noted.
THURSDAY JANUARY 23
On Thursday, Lockheed Martin, McDonalds, Starbucks and Microsoft all report earnings and Cramer intends to parse through results with a fine tooth comb.
"Lockheed Martin has been one of the most amazing stocks out there, a stock that many had bet against because of the sequester. But it never got dinged and has been a juggernaut. Somehow I think that continues when Lockheed reports, as the stock seems almost charmed," Cramer said.
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Cramer worries that McDonald's may struggle as more people embrace healthier eating habits. "For many, McDonald's represents the corrupted food chain itself. The good news? There's a resiliency to the stock. But you know what? I think Wendy's is the horse to bet on in the fast food race, not McDonald's."
Cramer called Microsoft an odd-duck. "I don't know a soul who's in it for the earnings, which, judging by Intel's performance, won't be so hot. They are in it to hear who the new CEO. According to Street chatter an outsider CEO might be able to quickly bring out value, while an insider CEO wouldn't knock the stock back too much. I share that view of the risk reward and think it's a good one."
Looking at Starbucks Cramer thinks any pullback presents opportunity. "We know that Howard Schultz talked about the company not being immune to the rapid decline in mall traffic because it has a ton of stores at malls. However, I take a longer term view here and think it's a buy into any weakness."
FRIDAY JANUARY 23
Four more companies will capture Cramer's attention on Friday, Bristol Myers, Stanley Black & Decker, Kimberly Clark ad Honeywell.
"Bristol Myers is a favorite of mine because it has embraced biotech like no other big pharma play. I think it should have an excellent quarter," Cramer said.
Turning attention to Stanley Black & Decker, "I simply do not believe it can issue as horrid a quarter as it did last time. The stock's down a bunch and the turn could be at hand in Europe, which has dogged the company."
"I'd love to hear Kimberly Clark trace out the process of the spinoff of its health care business, which I bet will create a huge amount of value," Cramer noted.
As for Honeywell, Cramer is a big fan of CEO Dave Cote. "My charitable trust has a very big win with Honeywell, and suffice it to say I would not sell ahead of the quarter."
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