How the Dow Will Add Another 1,000 Points
Cramer’s never been afraid to make a bold statement about the markets, though sometimes it comes at a price: skepticism and doubt – jibes, even – from the Street. But over time he’s gotten used to the naysayers and nonbelievers. So when he predicted the Dow Jones Industrial Average would rally 17% this year to reach 14,548, he didn’t pay much attention to the hate mail.
The index has registered 46 new highs since the beginning of the year, but still Cramer gets no respect. Traders and analysts just don’t think his target is achievable. So all this week he’s going to focus on the reasons he thinks the Dow will leap the 1,000 points it needs to hit 14,548. He’ll take each stock, one by one, and explain how it could contribute to the upside of the index and which might be the best plays for Home Gamers. (Yeah, we know the S&P 500 broke through a record today, but Cramer wouldn’t be Cramer if he delivered the obvious.)
There are some key reasons the Dow should jump, Cramer says. First, the index is the home of the biggest blue-chip buybacks, with 29 of the 30 companies retiring stock. The only stock that isn’t? General Motors. So it’s no surprise the company hasn’t contributed to this recent run.
Second, most of the companies are ROWers, meaning they get a good portion of their business from the Rest Of the World. According to Cramer, the U.S. is the one market that just can’t catch a break right now, so strong international exposure is favored.
Fourth, the environment is ripe for takeovers, no matter how big some of these components may be.
Finally, Cramer says, this is an ideal environment for these stocks. The economy’s not hot, the Federal Reserve seems to always be on the verge of easing rates, and the Dow isn’t geared to housing, which is the weakest part of the economy.
Bottom Line: The Dow’s coming to 14,548 by the end of the year, Cramer says. If you still don’t believe him, he’s going to take you on a whirlwind tour through every single Dow component all week long.
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