Cramer’s game plan: Strategies for steering thru sell-off
It was a horrible week for stocks. Blood was almost running in the streets by Friday's close with the S&P 500 posting its worst 2-day drop since the summer of 2012.
To make the decline that much worse, the benchmark index fell below its 50-day moving average for the first time since Dec. 18, a key technical level.
Among the 10 major S&P 500 sectors, industrials fared the worst, down 2.6 percent, a sign that investors may be growing skeptical of global growth altogether.
"Just how bad are things out there?" mused Jim Cramer.
With panic stemming every corner of Wall Street, following are the earnings and other events that Cramer intends to watch and leverage as he attempts to navigate another potential wave of selling in the week ahead.
MONDAY JANUARY 27
On Monday Cramer will closely listen to results from Caterpillar. "This company will be like a thermometer for global growth," he said. If you're a bull, watch out. Cramer thinks these results could confirm that China is wobbling.
Then, "After the close we get results from Apple," Cramer added. What this company says could well effect the entire market.
"If CAT's bad in the morning and Apple's bad in the evening, than I'd bet Tuesday will be some sort of a whoosh day, a real give-up capitulation session," Cramer said. However should that happen, "I'd get aggressive about buying the stocks of companies that have already reported great earnings."
TUESDAY JANUARY 28
On Tuesday the airline sector will command Cramer's attention.
"The deal that allowed American to merge with US Airways is a match made in heaven so I think we're going to hear about a terrific roadmap to future profits," Cramer noted. "If Apple and CAT are bad, and this call's a good one, you probably don't want to wait. Just go buy American Airlines."
Then, two other earnings should provide valuable insights on the state of global growth.
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Ford also releases quarterly results on Tuesday, and Cramer wants to hear about sales in other nations. "Now that Argentina's falling apart, I want to hear about their Latin American facts and figures."
Then, Cramer will turn attention to DuPont and the effect of global woes on its business. The company is transforming itself, "let's see how it's impacted by the cycles underway worldwide."
WEDNESDAY JANUARY 29
"Wednesday's the day that I'm counting on to tell us if there are buyers looking to get into stocks without much economic exposure," Cramer noted.
Cramer will be listening specifically to Biogen Idec and Wellpoint. "Both are pristine healthcare stocks that typically go up when the rest of the market goes down." The price action could provide a valuable measure of fear in the market.
THURSDAY JANUARY 30
"Here's what you need to know: if we're still headed down by Thursday. Look to these stocks as places to go if they deliver good numbers. Unlike today, where we still haven't discounted the negative news, by next Thursday we should be dramatically less emotional, and these are stocks that could shoot higher if the market's once again willing to differentiate among stocks by then."
FRIDAY JANUARY 31
If the market is a mess from Monday right through Thursday, then Cramer suggests putting money to work on Friday.
"If we have four straight sessions that are horrendous then I'd get ready to buy because some stocks will be oversold," Cramer said.
"I suggest considering AbbVie if you're bearish about global growth, Weyerhaeuser if you think that interest rates have been brought low enough to restart housing, and MasterCard if you just want a terrific secular grower that, by next Friday, might be trashed beyond all recognition. "
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