Cramer Explains Monday's Market
U.S. stocks closed mixed Monday, with the Dow Jones industrial average edging closer to the psychologically-important 13,000 level and the S&P 500 index holding near its key 1,370 level, but gains were limited as the Nasdaq was dragged down by tech titans Apple and Google.
Seeking to explain the day’s action, “Mad Money” host Jim Cramer said the Dow is composed of big international companies that were finally able to break free from concerns over Europe’s debt crisis. For the entire month of April, these stocks were held hostage to the Europe’s debt troubles. Cramer said most of these companies have no real ties to Europe, though, so the fears are overblown.
Nevertheless, the market got a surprise today when Europe didn’t sell-off and the euro actually rallied. Those who had been dumping big international companies because of European exposure suddenly got caught on the wrong side of the trade.
“We ended up with what amounted to a frontsie-backsie day where all of the last month's winners, stocks that were unaffected by the weak euro and the miserable European stock markets, got pummeled, while the losers that had become risk free shorts because of an expected European decline were actually able to rally,” Cramer said.
Many of the companies set to report earnings this week need a weaker dollar to give a positive outlook. In turn, names like 3M and Johnson & Johnson were able to see their stocks rise sharply. The problem is that there is not enough money in the market to go around, though.. So for an investor to buy one of those stocks, they probably needed to take money out of something else, such as Apple or Google .
Google missed on a few key metrics during its latest earnings report and people who bought Apple on last week’s decline took profits or hedged their bets today.
In the end, Cramer said the day’s action gave investors an opportunity to buy certain stocks at discount. Others were able to take profits in many of the stocks that posted nice gains.
—Read on for the 5 Earnings Cramer Is Watching Tuesday
When this story was published, Cramer's charitable trust owned Apple.
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