Right now, it’s domestic stocks that are doing well. Just look at Toll Brothers, Masco and Fortune Brands .
Retail, too, is rallying, though investors may wonder why. Oil is still at $106, and housing prices are still going down. So consumers don’t have much money to spend. Cramer attributed the strength to signs in the oil stocks. The oil-services index he follows (OIH) is signaling a drop in oil prices to $60 to $70. If that happens, then the price per gallon of gas at the pump would drop to $2.25. He said he finds that “hard to believe,” but some in the market are thinking that, coupled with housing price stabilization, will lead to a return of the consumer. Hence, the jump in retail stocks.
What’s going on with China? What ever happened to that post-Olympics return? Well, Cramer likened that country’s market to the Nasdaq in 2000. The index fell to 2,500 from 5,000, and still had another 1,000 points to go before it bottomed. China could mirror that fall, he said. But, if you believe the bottom’s in, Cramer recommended The China Fund.
Lastly, if you’re wondering why Fannie Mae and Freddie Mac stock isn’t trading at $0, Cramer chalked it up to “lottery ticket exposure.” The stocks are so cheap, it costs little for investors to buy, and they do so in the hopes that something pushes these names higher.
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