Before we dive into Cramer’s “Game Plan” for the coming week, a quick note about Friday’s action. This was a perfect example of the mantra he’s been chanting since the market’s lows of March 2009: Sell the rips, buy the dips. And today was most definitely a buyable dip.
Cramer called the jobs number Goldilocks-like in that it was good enough to relieve any talk of a double-dip recession but not so good as to let Ben Bernanke off the hook. The Federal Reserve chairman still needs to focus on quantitative easing and getting this economy back on track. So while the 103,000 new jobs in December may have looked bad, Cramer thinks the reality of them, that they were “just right,” helped the market rebound midday.
Then there was that Massachusetts Supreme Court ruling against two foreclosures made by Wells Fargo and US Bancorp . Some investors feared that would ripple out across the country as other courts followed suit, hence the decline in banks on Friday. But Cramer doubted that America’s most liberal bench had set a precedent other jurists would follow. The most that would come of this would be the chance you had to buy Cramer fave Bank of America on the cheap.
Cramer’s message was that “Mad Money” viewers shouldn’t be frightened out of the markets at the slightest hint of what looks like negativity. Instead, they should buy those pullbacks. Because the way he sees it, the U.S. is in for a good 2011 thanks to better employment, more stable housing prices, stronger auto sales and robust exports. Trust that thesis and you can see why Friday offered such a great opportunity.
“Yup, things are looking up so you've got to buy into the kind of ugly weakness we had midday,” Cramer said. “Don't fear the sell-off. Hope it lasts so you can pick up more great stocks at a discount.”
Now for next week:
Alcoa reports on Monday. Cramer told viewers to to buy, buy, buy if the stock comes in for any reason at all, as he expects a great 2011 for this company. Either the company does well on its own and the share price soars, or another company buys Alcoa and stock goes up that way. He predicted a $22-a-share bid if and when that happens, a nice premium from Friday’s close of $16.42. What to look for from the earnings report: cash flows over earnings, a stronger balance sheet that allows for higher dividend payments and stronger end markets.
Don’t hold your breath on Tuesday for a good quarter out of SuperValu , one of Cramer’s dogs of the Dow. But do watch for, in the very least, no bad news out of Lennar . Cramer isn’t recommending the homebuilders, but he pointed out how KB Homes’ ability to report a profit sent that stock and others rising on Friday. Still, if you want to play housing, Cramer still prefers Bank of America.
Wednesday brings news from DragonWave , a wireless networking equipment company. Cramer said he’s eyeing this stock because of all the takeover speculation after Qualcomm’s acquisition of Atheros . Make no moves, though. This is just something to watch.
Intel should prove its doubters wrong on Thursday, Cramer said. Analysts seem to hate the stock for missing the initial push of the mobile Web and for not having any tablet exposure. But the “Mad Money” host predicted that Intel should show how strong its server business really is, in addition to laying out its mobile and tablet plans. That’s why he thinks investors should own this stock.
JPMorgan Chase reports on Friday, and Cramer wants to hear about a potential boost of its dividend. He’ll also need to hear about whether the bank is playing offense or defense right now, as well as why investors shouldn’t worry about that Massachusetts foreclosure ruling. In the end, it comes down to that dividend increase, though. Anything less, Cramer said, and JPM could sell off big time.
Finally, there’s the macroeconomic picture, with the Producer Price Index on Thursday and the Consumer Price Index on Friday. Cramer’s takeaway? Remember, investors will be watching these because of commodity inflation, but remember that the price of housing is in neither gauge. And more importantly, the U.S. is a service economy that’s biggest cost is labor, and labor right now is the cheapest it has even been in this country. So resist any tendency toward hysteria if people start squawking about inflation.
When this story published, Cramer’s charitable trust owned Bank of America and JPMorgan Chase
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