China’s influence on the US markets extends only so far, Cramer said during Wednesday’s Stop Trading!, thanks to oil. A bad day in Asia predicted the same for the States, but a surprise drop in crude inventories changed all that. The good news cheered investors, who sent the price per barrel up and took stocks with it.
“If oil had been down today,” Cramer said, “I think we might have been down a percent and a half.”
Cramer pointed out that 15% of the S&P 500 – the mineral, machinery and oil stocks – is directly related to China-driven demand. But if oil is removed from the group, then the S&P’s exposure to China drops to 5%. That lessens the pressure that a negative trading session in the East Asian markets can exert on the US.
“When oil’s up $3,” Cramer said, “it counteracts the major Chinese trade.”
It also counteracts the secondary trades, he said, such as Potash . This stock should be down given the company’s ongoing negotiations with China, but instead POT is up as a play on ethanol. Investors turn to alternative-energy stocks when oil prices push higher.
- Video: More on Why US Stocks Escaped China’s Wednesday Woes
Elsewhere in the market, Cramer said there were health-care plays worth buying. Regardless of what form a new bill will take, it seems apparent that President Obama’s most hoped-for reforms won’t be included, and that’s good news for companies like WellPoint and Triple-S Management . Cramer said that GTS could jump to $18 from its present level of about $16.50.
Historically, these insurers traded at 14 times earning, the Mad Money host said, but they’re at just 12 right now because of the health-care hoopla. With the worst of the debate having passed, he thought they could regain those lost two points, which could mean a 10% to 15% jump from here.
“I see these stocks still going higher,” Cramer said.
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