Jim Cramer said Friday his “Game Plan” for next week is “going almost all Europe, because while they do have a July 4th over there, they sure don't celebrate it.”
Nevertheless, the “Mad Money” host noted that next week will be the last week before corporate earnings season. So Cramer recommends investors use any strength to “lighten up” on troubled sectors, such as technology, industrials and banking. If the oil and gas sector gets a lift, he recommends lightening up on the whole complex, especially the drillers. Elsewhere in the market, he thinks the retailers may soon be oversold and suggests Bed Bath & Beyond. He also likes most health care stocks now that the U.S. Supreme Court has upheld the Affordable Care Act.
On Monday, Cramer will look for the June Institute for Supply Management, which is sometimes referred to simply as the ISM index. Some on Wall Street think the number will disappoint, Cramer said, because of the sudden cessation in oil and gas drilling caused by the collapse in commodity prices. Either way, Cramer thinks the Purchasing Managers Index or PMI might be more important.
“We need the Germans to start feeling the pain of the rest of Europe. So far this has not been the case at all. In fact, Germany's economy has enjoyed both relative and absolute strength,” Cramer said. “Maybe a weak PMI number will cause them to think twice about their intransigence against promoting growth in the rest of Europe.”
June truck sales will be released on Tuesday. Cramer said oil and gas companies are typically among the biggest buyers of trucks, as they need to haul water and sand. But he noted truck sales have struggled lately because almost every driller is throttling back and that means there have been far fewer truck buyers. Cramer doesn’t likeNavistar and recommends investors wait until the quarter before considering Cummins’ stock.
Eurozone retail sales numbers will be announced on Wednesday. The Spanish government is considering a retail sales tax, which Cramer thinks would be “disastrous” given how weak the Spanish customer is. But so long as German policymakers push for austerity measures, Cramer thinks tax hikes could happen.
“Let's see how terrible these retail sales are without a higher tax rate,” Cramer said. “I bet they're awful. Yet the Germans still want tighter money.”
On Thursday, the European Central Bank will meet and Cramer will be watching.
“We know that the Europeans raised interest rates twice last year. Talk about being stupid. That was amazingly dumb,” Cramer complained. “So far they've only rolled back one of the rate hikes. Isn't it time for them to cut? I would think so. If not now, when? Of course, if they don't cut, expect more pain.”
Crude inventories will also be released. If they spike, Cramer says you can count out any rebound in the oil and gas space. He doesn’t recommend a sizable position in the space unless you are willing to take some “inventory glut pain.”
On Friday comes the Labor Department’s non-farm payroll for June. Cramer doesn’t think the number will be hot given how awful the employment picture has looked lately. He would not buy any industrial stocks ahead of this number.
And here’s the bottom line:
“Next week is the last one before earnings season kicks off, so use any strength to sell stocks in the sectors that are likely to report lousy numbers, particularly the techs, the industrials, and the oil and gas names,” Cramer said. “And, of course, keep an eye on Europe, where the fourth of July is, unfortunately, just another sorry day of the week.”
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