Earnings season will kick into full gear next week, but Cramer on Friday said not to trade off earnings reports. Instead, he recommends investors formulate opinions on certain sectors by listening to key conference calls.
The bulk next week's earnings will be from the banks, including Citigroup C on Tuesday morning, Goldman Sachs , US Bancorp , Wells Fargo and State Street on Wednesday, Morgan Stanley and PNC on Thursday, as well as Bank of America and BB&T on Friday. Cramer said these banks are unlucky, though, because they report after JPMorgan Chase , which boasted better-than-expected earnings on Friday morning.
JPMorgan raised the bar, Cramer said. Therefore, the Street will expect the rest of the banks to mirror their results. JPM showed net interest margins are stabilizing, which is what banks make on the difference between the amount they pay customers for deposits and the interest the banks are paid on loans. It also reported declining credit losses, which has improved its balance sheet and may allow it to soon pay a dividend.
Cramer doesn't recommend selling the banks should their earnings not measure up to JPM, though. He does, however, hope for a pullback. After all, the banks have been on quite the run lately. Take Bank of America, for example, which saw its stock climb 14 percent this year. The "Mad Money" host likes BAC, but not at these levels. He'll wait to see how the stock does after earnings.
Meanwhile, Cramer fave Apple reports earnings on Tuesday afternoon. He has been behind this technology stock since Jan. 5, 2009 when it was trading at around $94. Since then, it's posted a 268 percent gain and Cramer still thinks it's a buy.
Apple is historically a conservative company, but Cramer expects it to earn $6 this quarter. His expectations is street high, meaning he expects Apple to earn more than others are expecting. But given demand for 50 million iPads and the possibility of 10 million iPhones on the Verizon network, Cramer is optimistic. For those who don't own Apple, he recommends waiting until after earnings. If analysts don't like the company's conservative guidance, the stock could pullback.
Speaking of tech, Google reports earnings on Thursday. Cramer recommends buying GOOG, but not its common stock. Instead, he suggests deep-in-the-money call options. He would buy the Feb. 595 calls for $38.50, which gives you a call on the quarter and a potential breakout to new highs six points from here. It also gives you protection to the downside.
Parker Hannifin will also report earnings Thursday morning. One of the first major industrials to report, Cramer thinks it will provide indicate whether the whole group has run up too much.
Finally, Schlumberger reports on Friday morning. Its earnings results will dictate how the oil service group will trade, Cramer said. The Street has liked the oil space lately being as it's expected to climb to more than $100 this year. Schlumberger CEO Andy Gould will likely comment on where he sees oil prices going.
"Don't buy or sell until you've read not the headlines, not the stories, but the conference call transcripts and the analyst's reports," Cramer said. "It's just too darned hard and you will lose too much money if you react lickety split, even in this powerful bull market."
When this story was published, Cramer's charitable trust owned Apple, Bank of America and JPMorgan Chase.
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