If the market is anything right now, it's unpredictable. Considering stocks surged on Friday, reversing most of the prior day's losses, investing is not for the faint of heart.
Pros, such as Jim Cramer, urge caution; they say the selling may be far from over. However, a shrewd investor is a prepared investor, and there are a string of catalysts on the horizon that could move single stocks.
With one eye on geopolitical events, here's what Cramer will be watching in the week ahead.
Mon., July 21
If or Middle East-induced weakness drags down stocks broadly, Cramer thinks "you might have an opportunity to make hay" in the wake of Haliburton earnings. "Here's the scenario: if we get angst and worry, and then the market goes down, but HAL's numbers are good, then I'm a buyer of a decline. Think of it as the market putting a good stock on sale."
Also Cramer thinks Chipotle is worth watching. With the stock gaining 14 percent in the past three months and food costs on the upswing, Cramer says, "if you don't own Chipotle, wait." Many stocks that have made big runs have sold off after earnings and input costs could be a headwind. Therefore, Cramer says, "You could have an unbelievably terrific opportunity to buy the finest quality restaurant chain at a discount after the quarter."
Also Cramer will be looking at Netflix earnings. Considering , Cramer said he was bullish on Netflix because he views it as somewhat akin to Time Warner's crown jewel, HBO. "If Netflix goes down, I think it could make for a terrific takeover play. If it reports a good number, as defined by many new subscribers, it could soar. So I'd put half a position on for Netflix, on Monday before the company reports, and then I'd buy the rest if the stock has a post-quarter pullback."
Tues., July 22
As far as Cramer is concerned, Tuesday is all about Apple. "I know the stock has had a marvelous 16 percent run year-to-date, but I think this company makes the best possible products and has one of the most pro-shareholder management teams out there. Plus, the company just announced an amazing deal with IBM. When people ask me what to do with Apple I say, do what my charitable trust does: own it."
Wed., July 23
On Wednesday, aerospace will take center stage as Boeing reports earnings. Although Cramer is a long-term bull, in the short term, he thinks if you want to establish a position, you'll be able to do so, lower. "I think that even if the company reports an amazing number, you'll be able to buy Boeing after the quarter for less than where it will be trading two years, two months, or even two weeks from now. So wait and see."
Also Wednesday, Cramer will be glued to results from Facebook. "I say own it, half ahead of the quarter on Wednesday night and half after. I say that because I believe Facebook has captured the imagination of advertisers worldwide and has the best mobile strategy of any company on earth. Plus, it sells at a huge discount to its growth rate."
Thurs., July 24
"First there's American Airlines, which, while only a few points off its highs, remains extraordinarily cheap. I recommend buying, if it heads down on worldwide tensions, ahead of the quarter," he said
"We also get results from Ford and General Motors, and I think both are so cheap on earnings that lots of good can happen."
And then there's Caterpillar. "This past Wednesday we heard from United Rentals, which is the nation's largest provider of rental earthmoving equipment. The number was spectacular, and I think that's the perfect predictor of how well Caterpillar could do this quarter," Cramer said.
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Looking at Amazon, for quite some time Cramer has been cautious of high multiple stocks. However, if you have an appetite for risk, he recommends owning deep in the money call options, before the quarter. "According to technical analysis from Tim Collins, Amazon's daily chart is among the best in the book. Also, the company's last quarter was viewed as a bit of a disappointment, which is a positive because expectations are lower than usual."
Fri., July 25
On Friday, Cramer says the durable goods number will be a very important piece of economic data for investors. That's because he thinks the Fed will start raising rates and "a strong durable goods number will make rate increases all the more likely. Of course, most stock players dislike higher rates, but I think that's shortsighted. Remember, interest rates will still be very low even after three or four rate hikes, and while stocks often fall on the first one, they tend to bounce back quickly."
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