GO
Loading...

Game plan: Cramer tackles earnings season

(Click for video linked to a searchable transcript of this Mad Money segment)

Selling prevailed in the market on Friday with the Dow Jones industrial average and the S&P 500 both closing lower. However, it was the price action in the Nasdaq that really captured the attention of pros; by the end of the session the Nasdaq had made its biggest drop in two months.

"I've been adamant that the sheer number of IPOs was a sign of froth," said Jim Cramer, adding that the valuations may not be sustainable.

Although the host of "Mad Money" says he is hopeful that the weakness will be what he calls a "garden variety decline," he also thinks it's too soon to buy the dip.

"Until we're sure this isn't a 2000-style parable, where some stocks had moved up too far too fast, caution is warranted," he said.

Although Cramer also believes there's opportunity in the market, he advocates viewing moves through the prism of professional investors; and next week pros may be feeling somewhat fragile.

Keeping that in mind, here's what Cramer will be watching as earnings season gets underway in the week ahead.

Adam Jeffery | CNBC

TUES., APRIL 8

Cramer is always eager to hear from companies. He believes there's no better way to take the temperature of American business than with the earnings and commentary provided by firms as they report on the quarters.

Alcoa kicks off earnings season on Tuesday.

"Alcoa has been on a non-stop tear since last year; it's up some 50% from its October bottom. I don't think that's sustainable in this environment, even if it trumps the estimates by a wide amount, so it wouldn't surprise me if we got some first class profit-taking," Cramer said.

Although Cramer thinks shares may decline, that doesn't mean you should ignore the results all together. "Alcoa does much more than just report numbers, it also gives you an overview of multiple businesses, including autos, non-residential construction, aerospace, truck building and consumer products, throughout the world. This is a tremendous overview and one from which many decisions can be made."

WED., APRIL 9

On Wednesday, Cramer will turn his attention to results from Constellation Brands. "I think you'll see a real world divergence between the unfolding Nasdaq train wreck and what's smoking on the good old New York Stock Exchange," he said.

Also, Cramer will be closely watching results from Bed Bath & Beyond. "It's well off its highs, but it didn't get hit that much in the selloff. For me that puts this stock in no man's land ahead of the quarter."

THURS., APRIL 10

Although Cramer is a long-term fan of Pier 1, he believes caution is warranted ahead of those results, due Thursday. "CEO Alex Smith is one of my Bankable 21 from "Get Rich Carefully." Still though, his company has missed the estimates a couple of times in a row. I bet he beats the numbers this time, but the stock's not down ahead of the number. I can't buy."

--------------------------------------------------------------
Read more from Mad Money with Jim Cramer
Tax strategy could send you to the poor house
These stocks are too cheap: Cramer
Two stocks with eye-popping gains
--------------------------------------------------------------

If you are looking to put money to work, Cramer thinks Rite Aid is a possible buy, ahead of its Thursday earnings release. "Shares started getting hammered today as part of the broad pullback in speculative names. I think if you can get this stock with what's known as a five handle, or $5, and if the speculative stocks slaughter starts to ebb, then you have my blessing to pull the trigger."

FRI., APRIL 11

On Friday, banks will steal the spotlight with earnings from Wells Fargo and JPMorgan. "Until Friday's employment number, which was decent but produced a huge decline in interest rates, I was hopeful that we'd begin to see rising rates. Since that hasn't happened, I will listen to these reports to hear the tone of business," Cramer said. "But I wouldn't buy; they're no bargains versus some of the growth stock babies that have gotten thrown out with the bathwater."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book