Cramer's Investing Club: What we learned this week and what we are watching next week

Published Fri, Dec 3 20215:09 PM ESTUpdated Fri, Jan 14 202212:06 PM EST

(This article was sent first to members of the CNBC Investing Club with Jim Cramer. To get the real-time updates in your inbox, subscribe here .) The S & P 500 pulled back in what was a very volatile week, as investors attempted to price in the potential impact of the Omicron COVID variant and commentary from Federal Reserve Chair Jerome Powell that "the risk of higher inflation has increased." As a result of the this updated view, Powell added that the Fed may consider speeding up the pace of its bond purchase tapering plans. While all major averages finished the week in the red, the Nasdaq was the hardest hit as Powell comments resulted in expectations for higher longer-term interest rates over time and therefore a contraction in the multiples investors are willing to pay for longer duration stocks (think those that trade on a price-to-sales basis with actual earnings only expected to materialize far into the future). Under the hood this week, all but two sectors closed in the red as investors made a flight to safety: utilities and real estate. Communication services, consumer discretionary and the financials led the major benchmarks to the downside. Our strategy: While the averages are only single-digit percentage points off their highs, there has been a lot of carnage under the surface and that is where we as stock pickers see opportunity. As we noted earlier today , one of the profiles were are eyeing closely are those stocks with strong free cash flow generation and shareholder friendly capital return programs because companies with strong balance sheets, healthy dividend payments, and consistent share repurchase programs are typically ones that can withstand and find support in volatile markets. What we learned this week: Here is a quick look at some of the broader market measures we like to keep an eye on: The dollar index held around the 96 level. Gold pulled back to just below the $1,800 level. WTI crude prices remain under pressure, heading into the weekend in the mid-$60s region. And the 10-year Treasury has pulled back to the mid-1.3% level as investors sought out safety amidst the market volatility. Within the portfolio we heard from Salesforce (CRM) and Marvell Technology . (Click the company name for our earnings breakdowns.) In addition to earnings, we received a few notable macroeconomic readings this week: On Monday, the National Association of Realtors reported that pending home sales index advanced 7.5% in October to 125.2 (100 being equal to the level of activity seen in 2001), well ahead of expectations for a 0.8% monthly advance. However, despite the monthly advance, on an annual basis, sales were down 1.4% versus the year ago period. On the release, NAR chief economist Lawrence Yun attributed the strength to buyers on "strong financial footing" pulling forward purchase plans due to rapidly rising rental rates and an anticipated rise in mortgage rates. Looking forward, while Yun expects prices to