Why the Averages Are Lying
The averages on Wednesday told a much different story than the one that Cramer’s hearing from the economy. While the Dow lost 72 points, presumably because of unenthusiastic statements from Ben Bernanke, the Mad Money host pointed to a slew of data points that just may contradict the Fed chief.
Now, Cramer wouldn’t deny that today’s market action was bad, but he does see a host of positives that make the Dow decline worth buying. Not the least of which was Goldman Sachs’ report that KeyCorp , Huntington Bancshares , SunTrust and Regions Financial should see a boost in earnings once their high-priced certificates of deposit roll over. If that’s the case, then shouldn’t investors snatch up these stocks at a discount?
Then there’s the flurry of retail upgrades on companies that disappointed last quarter. Urban Outfitters , Staples and Polo Ralph Lauren all earned commendation from analysts who see their businesses improving.
And Tractor Supply today offered a great outlook for its business, too. This company sells expensive goods to farmers in rural areas, and apparently this demo is spending. Also, research has come out that the price of uncoated free sheet paper, a key commodity with wide usage potential, has jumped.
Even the latest issue of DRAMeXchange had good news to share. This trade publication said that a positive cycle in semiconductors is coming, and it should last for multiple years.
You also could throw in a strong analyst presentation today from EOG Resources , which helped the stock recoup its post-earnings dip in February. And today after the Bed Bath & Beyond beat Wall Streets expectations.
Cramer said these data points will ripple out into the rest of the market and economy. If Tractor Supply is doing well, then shouldn’t Scotts Miracle-Gro see improvement as well? If that free sheet paper is climbing in price, then doesn’t that mean International Paper deserves a higher share price? What about Micron Tech and AMD ? Shouldn’t they be bought as plays on the semi cycle? And certainly Citigroup will benefit from the CD rollover that Goldman discussed, right?
So while the averages may tell you to sell, Cramer said, the data’s saying otherwise. And he wants investors to trust the data.
Otherwise, he said, “You’re going to get burned.”
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