Cramer: Next Week’s 2 Key Earnings Reports

Two make-or-break quarters next week could move the market higher or cost the Dow 1,000 points, Cramer said Friday. Both will speak directly to the potential for a housing bottom, something that is essential for the US economy to recover.

Lowe’s and Home Depot will announce their earnings on Monday and Tuesday, respectively. These companies are crucial because they are overexposed in two of the country’s hardest-hit areas: California and Florida.

Little good news has emerged from either state, so Cramer will be watching to see if consumers are spending to improve their homes. If the extra money seen through mortgage refinancings is being reinvested, that might be a sign that people trust the economy is getting better. If cash is being hoarded, the economic winter we’re in could last a bit longer.

This call is part of Cramer’s attempt to form a “worldview” of the market. Every investor needs an opinion of the economy before he or she buys stocks, the Mad Money host said. But while a lot of Wall Street vets look to economic indicators like the jobs report and housing starts to help pick stocks, Cramer takes a more micro approach. He looks at what individual companies are saying, listens to conference calls and pieces it all together to figure out his next step.

Cramer likened his approach to an electoral map. The media doesn’t weigh every state equally when trying to predict the next president. Investing is no different. While Pennsylvania might be a swing state in politics, California and Florida carry more weight when it comes to the economy.

That is why he’s so concerned with next week’s earnings reports from Home Depot and Lowe’s. As we said earlier, they will tell us how the U.S. is doing. Only then will Cramer form his worldview, and, as a result, pick stocks he thinks are worth buying. He urged viewers to do the same.

Cramer's charitable trust owns Home Depot.

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