What Cramer is watching Friday — looking for early signs of a market bottom

Published Fri, Jun 17 20229:06 AM EDTUpdated Fri, Jun 17 20229:11 AM EDT

What I am looking at June 17, 2022 The bottoming process requires genuine throwing in the towel. The best example would be the homebuilders. Take Toll Brothers (TOL). This morning Wells Fargo downgrades TOL to hold from a buy, even as it sells at 4 times earnings and is down 44% — the average decline of this kind of stock right before the END of a bear market. Just when you think the negativity is built in to a stock, a bull throws in the towel. There are now NO buy recommendations among the twenty-some odd firms that follow Toll Brothers. Just neutrals and sells. No one left to downgrade … Not a bottom: Adobe (ADBE) reports a good quarter, but gives analysts a positive forecast that is distrusted. Mizuho calls the fourth-quarter forecast "perplexing." But as is typical for this moment, you get price target cuts that are still well above where the stock was in the halcyon days. And NO downgrades, which is unrealistic. It's hard to bottom that way. Of the thirty odd analysts covering the stocks, almost all are BUYS. KLA (KLAC) price target cut to $375 from $440 at KeyBanc. This stock is part of the semiconductor group that disrupted tech Thursday and had been the lone holdout as there was still too much demand for new equipment. KLA announced a giant buyback and a big dividend boost. But it went down anyway because there is a perception that there is, at last, too much inventory. Stifel says stick with the stock. Oil stocks have been crushed even as demand has gone up. President Joe Biden still has enough clout to send the sector down with vague attacks that are reminiscent of the Jimmy Carter windfall tax, which imposed an excise tax on profits. I can't think of a president that's been more negative toward American oil companies or capital. Most CEOs and purveyors of capital I meet are uniform in believing that Biden is: 1. either uncomfortable with, or fearful of, CEOs; 2. would rather be with Saudi pariahs than Texas oil men and women; 3. despises the creation of capital unless it is created by the federal government. Uniquely horrible combination of the White House and the Federal Reserve? Did the creation of the Amazon (AMZN) army actually fuel employment cost and wages? We will soon find out. In a shocker, Bank of America upgrades Azek (AZEK), after the artificial wood homebuilding supply company came through new York to meet investors. The stock is down 65% and attracts buy ratings. Watch this: Maybe down 65% is where you get upgrades. Citi says Azek is a "secular growth story at a discount." Increasing number of SPACs (special purpose acquisition companies) are starting to fail. Layoffs should lead to a decline in demand. Roblox (RBLX) downgraded to hold from buy at Truist. Believe it or not, the analyst says the period of outperformance is over. Could have fooled me. Building supply company Owens Corning (OC) is down only 15%, gets double downgrade to sell at Bank of America. Six times earnings. Still way too many buys and only one sell before this. Demand will get worse before it gets better. Important downgrade: Citi takes Dow (DOW) to hold from buy and says the outperformance of the chemical companies is now over. Westlake (WLKP) and Olin (OLN) downgraded by Citi too. Remember these are not price target cuts, they are actual downgrades. JPMorgan desk poll: What level would you feel comfortable buying SPX right now? Insanely low levels where people will buy: Responses range from 2,000 to 3,500, with a median 3,200. This is right in line where the stimulus began and would mean wiping out the ENTIRE move from the bottom … Sign of bottom: The Robinhood (HOO) Snacks newsletter is less and less about stocks. Why not. Hood is worth more dead than alive. China's central bank accepts Ant Group's application for financial holding company, reports Reuters. This is all about opening up the markets. But how about opening up the factories? Godfather 3: Every time I thought I was out, they pull me back in. So many great U.S. companies on sale, why go there? American Eagle (AEO) downgraded to neutral at B. Riley buy to hold ... thanks. Kroger (KR) price target raised to $53 from $50 from Deutsche Bank. Baird says buy American Express (AXP) as target of endless buying. Bank of American with internet estimate cuts: Meta Platforms (META), Alphabet (GOOGL), Pinterest (PINS), Snap (SNAP). But likes Alphabet and Meta. Darden (DRI) catches PT cuts at UBS and Barclays. (Jim Cramer's Charitable Trust is long AMZN, GOOGL, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in morning trading as investors continue to worry about inflation and other global issues.

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What I am looking at June 17, 2022

The bottoming process requires genuine throwing in the towel. The best example would be the homebuilders. Take Toll Brothers (TOL). This morning Wells Fargo downgrades TOL to hold from a buy, even as it sells at 4 times earnings and is down 44% — the average decline of this kind of stock right before the END of a bear market. Just when you think the negativity is built in to a stock, a bull throws in the towel. There are now NO buy recommendations among the twenty-some odd firms that follow Toll Brothers. Just neutrals and sells. No one left to downgrade …