Cramer: 2 Reasons Stocks Edged Up
Despite another day of choppy trading, Cramer said stocks were able to edge up on Tuesday because positive corporate news trumped the negatives surrounding Europe’s debt crisis.
For the most part, the good news came from the trucking industry, the “Mad Money” host noted. At an industry conference, several trucking companies said business has improved month-over-month since July. Volumes and pricing remained strong, too.
Cramer has long stressed the importance of the transports as a leading indicator of business in the U.S. Economic data, like a gross domestic production number or the unemployment rate , is important, but he thinks information from the transports is very telling.
Of all the sectors that have experienced declines lately, Cramer said the transports have had it the worst. So he took notice when the index not only changed direction, but posted a 3.42 percent increase. Investors have to wonder what these trucks are transporting, though, he said. They move paper, so consider International Paper . They’re also trucking chemicals, so think Airgas . Goods are being sent to retailers, too, so look at Bed Bath & Beyond , Ross Stores and Target .
Cramer said investors should typically be skeptical when an industry speaks so positively about how it’s doing. In this case, however, the good news is being backed up by Cummins . The truck engine maker increased sales and margins forecasts in all of its divisions, Cramer said. It’s growing in international markets, including Brazil, India and China. Cummins said demand is incredibly strong for new trucks.
Considering how well Cummins is doing, Cramer noted Caterpillar makes engines, too. Machinery maker Deere trades with Cat, he noted, so its stock is also worth considering. Joy Global trades with all three, so it’s another stock to watch.
The good news out of the transports isn’t the only thing that helped push stocks higher, Cramer continued. In addition to the transports, the technology space has also been struggling. Cramer has long said that summer is typically a slow time for tech and that it may begin to rally in early fall. Well, Cramer thinks tech has found its bottom.
One of the worst performing tech stocks as of late, Cisco Systems , said things are starting to look up from last quarter. Cramer thinks that’s major news and allows for other semiconductor stocks to go higher, including Altera , Broadcomm , Qualcomm and Xilinx .
The fact that individual companies are helping to drive stocks higher is notable, Cramer said, because that hasn’t been the case lately. Instead, it seemed all stocks were either all up, or all down. It seems a stock’s performance has more to do with the S&P 500 index than it does its individual sector.
So what’s the lesson here?
“You get a quiet day in Europe. You get no noise out of Washington. And you get some companies talking? You tend to hear good things,” Cramer said. “With that recipe, you get stocks that go higher and money being made irrespective of the gravitational pull of the larger indices.”
For a change, what companies said actually mattered, just like the old days and that’s how Cramer likes it.
When this story was published, Cramer’s charitable trust owned Caterpillar, Cummins and Deere
Call Cramer: 1-800-743-CNBC
Questions for Cramer? email@example.com
Questions, comments, suggestions for the Mad Money website? firstname.lastname@example.org