• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Financial Services

Cramer: This Is No Time to Dog-Paddle

In these market crosscurrents, it's tough to go with the flow.
By JIM CRAMER
Nov 15, 2016 | 11:29 AM EST
Stocks quotes in this article: FB, AMZN, NFLX, GOOGL, SPLK, CRM, NOW, WFC, JPM, BAC, HD, TJX, AAP, AZO, TEVA, AGN

You try swimming in these crosscurrents. To me, you have to be Michael Phelps to get to the other side of the pool.

Take this morning. We saw interest rates tick down for the first time while oil went up for the first time since the election.

What do people buy when interest rates tick down? They buy the fast-growing techs, the FANG stocks. Why? Because the average hedge fund says that when rates go down, the economy must not be on fire and perhaps we don't even get a rate hike.

So they sell the stocks that are rate-hike beneficiaries -- in this case the banks -- and they buy Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) , Alphabet, née Google (GOOGL) . They pick up some Splunk (SPLK) , Salesforce.com (CRM) and ServiceNow (NOW) . They do so because they know you do not need the cyclical wind at your back to make these work and hit the numbers. (Amazon is part of TheStreet's Growth Seeker portfolio.) 

Because there is no new money coming in, the only place to get it is what's been up. So it is totally zero sum. I do fear for FANG here only because, as the banks come down given the rate hike so many are not expecting, FANG will again become the de-facto source of funds to buy Wells Fargo (WFC) , JPMorgan (JPM) , Bank of America (BAC) and the like.

At the same time, oil's up, which means, remember, in hedge-fund speak that the economy is stronger than expected, not that there might be some positive OPEC chatter, although behind the scenes we hear about it. When oil rockets, you buy the airline stocks, aided by the fact that Warren Buffett's been a buyer.

Normally, people would buy the retailers off higher gasoline. I know, remember, this is portfolio-speak, not actual speak, and you don't ever want to confuse the two.

But on the downside, Home Depot (HD) was a little more conservative than would have been expected in its guidance and the numbers were aided by Hurricane Matthew. So profit-taking from the post-Trump rally has come in. Same with Dick's DKS, which has had a remarkable run from when the company's stock soared at the closing of the doors of The Sports Authority.

Those companies as well as TJX (TJX) all did well; guidance is what matters. And we know that from the monster move in Advance Auto Parts (AAP) , which reported minus-1% comp sales, typically disappointing unless, of course, you are looking for minus-3.5% and revenues of $2.25 billion when the Street was only looking for $2.2 billion.

Those kinds of numbers signal the turn that so many were waiting for. I remain committed to AutoZone (AZO) , which I believe has a chance to go into the high $700s just as a spillover on how well Advance Auto Parts is doing.

So the crosscurrent of tempered guidance from the great ones and better guidance from the beleaguered ones trumps the gains that you would get from higher oil signaling a better economy.

The oils themselves, though, have rallied in what amounts to a kind of business-as-usual move, which doesn't require Michael Phelps to navigate. At last something's working as it should! I think this may not last for oil because it's really about rumors again, rumors of a deal that will be so difficult to cobble together given that Iraq and Iran don't want to play ball with a freeze. However, as I have said over and over, when you get oil down to the low $40s, the rumors come out and they save the day. Always until one day, of course, they don't.

Always, though, if you want crazy, go no further than the drug and health care stocks. Teva (TEVA) pre-announces a bad quarter because of a branded stock's weakness -- not generics -- and Allergan (AGN) gets crushed again because it owns so much Teva from the deal where it sold its generics to Teva (once again, it is the Copaxone profits, the multiple sclerosis drug of Teva, that are in peril). Allergan, which has gone from universally loved to universally loathed after a bad earnings miss and a dumping by Carl Icahn of his holdings and a price target cut by Morgan Stanley based on generic competition to some of its drugs, gets hammered for the 10% of Teva that it owns as part of what looked like a brilliant deal to sell its generic drugs, except its stock acts so horribly. The trust owns it and we have said it is going to $180 where, on a reduced $15.50 earnings per share number, it is now the cheapest of big pharma. (Facebook, Alphabet, TJX, Wells Fargo and Allergan are part of TheStreet's Action Alerts PLUS portfolio.) 

It's all a mess and difficult as all get out. Where is Michael Phelps when you need him!

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long FB, WFC, GOOGL, TJX and AGN.

TAGS: Investing | U.S. Equity | Financial Services | Consumer Discretionary | Technology | Jim Cramer | Markets | Stocks

More from Financial Services

Here's When to Move on Zillow

Bruce Kamich
Mar 3, 2021 2:18 PM EST

A correction in Zillow Group is unfolding, so let it play out first.

Get Some Dividend Insurance With This Stock

Bob Ciura
Mar 3, 2021 12:23 PM EST

Mercury General offers a 4.2% yield and growth promise, as it offers insurance in 11 states including California.

Time to Consider Making a Withdrawal From Webster Financial

Paul Price
Mar 3, 2021 7:00 AM EST

I typically tell you when I see opportunities to get into, not out of, stocks, but this one appears to be getting overvalued.

Square Still Looks Vulnerable Despite the Recent Bounce

Bruce Kamich
Mar 2, 2021 11:00 AM EST

SQ's overall chart picture suggests more weakness is possible.

Rocket Companies Is Not Ready to Blast Off

Bruce Kamich
Mar 1, 2021 10:36 AM EST

The company went public seven months ago.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:53 AM EST GARY BERMAN

    Nasdaq Composite: Some Backing and Filling Is Here

    As today is the 4th day of the month, it seems lik...
  • 07:59 AM EST PAUL PRICE

    Fabulous News on United Natural Foods (UNFI)

    The major potential risk factor for , its contrac...
  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login