Mad Money with Jim Cramer
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The two most important events next week are jobs and jobless claims, Cramer said, “the Rosetta Stones of this market.” So much so that his game plan depended on them. He wanted to see claims come in below 400,000, “at the very least before we’re anywhere near the promised land.” That’s about where they were back on Dec. 15, 2007 – 346,000, to be exact – when claims where rising and job creation had begun to halt.
If the claims number is below 350,000, Cramer said, “that would tell us that things are getting better and make me more positive about the market.”
As for Friday’s employment report, analysts expect a loss of 180,000 jobs. We need to beat that, and pull away from 10% unemployment to at least 9.5%, before Cramer is willing to recommend economy-dependent cyclical stocks.
There are other reports worth watching, too. Both Nike [NKE
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]and Darden Restaurants [DRI
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]will clue us in on the consumer’s strength. Nike’s futures ordering program allows retails to request products five to six months in advance of delivery, and it often predicts actual sales. The common consensus says that these orders will be down 5% on a constant currency basis. Cramer will get more bullish or bearish based on whether the report beats the consensus. The same goes for sales at Darden’s Red Lobsters, Olive Gardens and Capital Grilles. If the company beats the expected 2.95% decline, then the consumer might be feeling more confident.
Jabil Circuits [JBL
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]reports on Tuesday. A disappointing quarter from the electronic-manufacturing-services company could give investors a chance to buy Cramer fave Flextronics [FLEX
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], if the whole group takes a hit as a result.
Also, the transports – UPS [UPS
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], CSX [CSX
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]and FedEx [FDX
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]– took a hit today, making defensive stocks more attractive. Cramer said he likes Pepsi [PEP
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]and Procter & Gamble [PG
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]among the so-called safety stocks.
Cramer recommended Abbott Laboratories [ABT
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]as well, saying the purchase of Solvay’s [SVYSY
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]drug business would bulk up the former’s pipeline. He predicted the deal could come as early as Monday.
There’s also the chance the federal government’s $8,000 tax credit for first-time homebuyers could get extended. This is important because a lot of investors are worried about a dip in housing if the credit expires. It will happen next week if it happens at all, because potential buyers need be in contract by November to benefit.
Lastly, a number of stocks could jump in price on Tuesday, the penultimate day of September, as money managers bid up their holdings’ share prices to make their quarterly numbers look good. This is against the rules, in fact, which is why they do it on the second to last day of the month rather than the last day. But Cramer said this would be the first good chance to buy stocks again, after this recent pullback.
To recap: Stay defensive, watch the jobs claims report and jobs number, and tune into the Nike and Darden quarters to take the pulse of the consumer. Also, look for an extension of the homebuyer tax credit and a deal between Abbott and Solvay.
That would set a “strong tone,” Cramer said of Abbott, and “give us a bullish backdrop to blunt the Kodiak who came a-calling in the nasty week that just ended.”
Cramer's charitable trust owns Pepsico and Procter & Gamble.
Call Cramer: 1-800-743-CNBC
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