• 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. / Energy

Cramer: Oil-and-Gas vs. Everything Else

Reams of stocks make sense on a pullback. And what looks bad? Anything even remotely connected to oil and gas.
By JIM CRAMER
Dec 15, 2014 | 07:08 AM EST
Stocks quotes in this article: TGT, JWN, TJX, WMT, PLKI, DIN, DRI, JACK, MCD, YUM, CBRL, RCL, CCL, DPZ, DIS, HD, SHW, AZO, ORLY, SNA, UAL, BMY, MRK, LLY, REGN, CELG, BIIB, BMRN, HSIC, PDCO, ABC, CAH, MCK, CI, HUM, WLP, MDT, EW, SYK, ZMH, BCR, BDX, SRCL, STE, CFR, XLF, CY, RFMD, AVGO

Stark, stark, stark: I am talking about the disaster that is oil-and-gas and its accoutrements vs. literally everything else in the chart book.

In fact I can pretty much make a case for any airlines, finance, health care, defense, consumer packaged goods, retail, restaurant, technology, household products, utilities, travel and leisure, and real estate investment trusts on any pullback. And we are seeing a pullback for certain.

You can read a great deal into these situations, and it's worth trying to puzzle through them.

First, we have the obvious beneficiaries of the reduction in gasoline: airlines, restaurants, retail, travel and leisure. These are, frankly, all moonshots. These shares are up pretty much in a parabolic fashion -- which is usually self-destructive, and would indicate that they are set for any sort of fall if oil sees a short-term bottom that takes it back to the $60s per barrel. This is something that Carolyn Boroden, the Fibonacci Queen -- one of my favorite off the charts tutors -- says could happen this week. See my assessment of Boroden's relevant chart here, starting at about 3:55, and her chart below.

Crude Oil -- Fibonacci Timing Cycles
Source: Dynamic Trader
View Chart »

Target (TGT), Nordstrom (JWN), TJX (TJX) and Wal-Mart (WMT) really stand out as winners here.

TGT, JWN, TJX, WMT -- Daily
Yahoo! Finance
View Chart »

Same with restaurant chains Popeyes Louisiana Kitchen (PLKI), DineEquity (DIN) and Darden (DRI) -- which reports this week -- as well as Jack in the Box (JACK) and the ferociously positive Fiesta Restaurant Group (FRGI). 

PLKI, DIN, DRI, JACK, FRGI -- Daily
Yahoo! Finance
View Chart »

I think because of the nature of the ETFs covering these areas, this stands to reason. You have to have a real outlier, such as McDonald's (MCD) with its worst-in-show numbers, or Yum! Brands (YUM), with its Chinese weakness, to buck the trend on these. A couple are super levitators: Cracker Barrel (CBRL) with its stores based on the freeways around the nation and Royal Caribbean (RCL), which is a gigantic consumer of fuel that does well right now and has a short base put on from the Ebola-scare days. Same with Carnival (CCL), which looks real good.

CBRL, RCL, CCL -- Daily
Yahoo! Finance
View Chart »

Most of these charts aspire to be like Dominos (DPZ) or Disney (DIS), just classic 2014 winners that could rest here or take one final lurch of the parabola into the end of the year. I think the former, with a slight pullback to trendline, is more likely. These companies are just net winners in the wealth transference from the oil producers to the consumers, and it could go on for a long time as we haven't even seen the number bumps yet.

The household-products contingent is similarly performing well, in synch with the Home Depots (HD) and Lowe's (LOW) of the world. It was jarring to see Sherwin-Williams (SHW) not go with the program on Friday, but I think the decline was pretty one-off, and I expect things to roar back. Auto-parts remains part of this robust group, as the assumption is that people will keep their gas-guzzling cars longer and just work on them to keep them running. It, again, is a time-honored thesis that will be jarred only if oil spikes. Stocks such as AutoZone (AZO) and O'Reilly (ORLY) are so overbought that you can't imagine them not coming down. Not so for Snap-On (SNA), which is total "go to" in this environment.

SNA -- Daily
Yahoo! Finance
View Chart »

The second group, the utilities and the real estate investment trusts, are tacit admissions that interest rates on U.S. Treasuries aren't going higher any time soon.

There are a variety of reasons why that is. First, the eurozone and China economies are going down in tandem, and that makes U.S. utilities valuable from the point of view both of lower rates and of the possibility of slower gross domestic product (GDP) growth worldwide, and a pick-up in business here that needs more power. The latter, the move in the real estate investment trusts, also makes sense, as these are domestic players that can raise rates because of a more robust economy. Their dividend yields are no longer compelling, and they are trading as growth stocks, which is never a good sign, making them very vulnerable to a pullback.

I worry about the airlines because old planes, which had become uneconomic due to jet-fuel costs, are now prized commodities. With the pricing umbrella of high rates, it stands to reason that a couple of hedge fund guys, or a private equity firm, must be about to open a cut-rate airline. This is what always happens, and it will happen again. Notice I say "will," not "might," because history is always repeating itself in this group. That's why it hasn't acted as well as you would expect, save for marginal players such as JetBlue (JBLU), and the under-managed United Continental (UAL), as Herb Greenberg has documented so well.

JBLU, UAL -- Daily
Yahoo! Finance
View Chart »

Health care? How about perfect? Bristol-Myers (BMY), Merck (MRK), Lilly (LLY) on the big pharma seem ideal.

BMY, MRK, LLY -- Daily
Yahoo! Finance
View Chart »

All the biotechs, but particularly Regeneron (REGN), Celgene (CELG), Biogen (BIIB) and BioMarin (BMRN), are very spiky, yet are naturals to buy on an oil-related pullback.

REGN, CELG, BIIB, BMRN -- Daily
Yahoo! Finance
View Chart »

You want perfection? Return to the dental plays, namely Henry Schein (HSIC) and Patterson (PDCO), or the over-loved big three, AmerisourceBergen (ABC) -- simple as ABC -- Cardinal (CAH) and McKesson (MCK). These are the most natural stocks to come to on any pullback.

HSIC, PDCO, ABC, CAH, MCK -- Daily
Yahoo! Finance
View Chart »

I like them more even than I do Cigna (CI), Humana (HUM) and WellPoint (WLP), all of which are extraordinarily strong. So are such stocks as Medtronic (MDT), Edwards Lifesciences (EW), Stryker (SYK), Zimmer (ZMH), Bard (BCR) and Becton Dickenson (BDX) and Stericycle (SRCL) and Steris (STE), to name just a handful of beauties. These are stocks that are going higher on the backs of the slowdown in China and the recession in Europe. I suspect that they will all be bought into year-end.

MDT, EW, SYK, ZMH, BCR, BDX, SRCL, STE -- Daily
Yahoo! Finance
View Chart »

There's a lot of interest in the financials. It's not overwhelming, and it is a little more case-by-case than the financial ETFs would have you believe, probably because of worries about banks with loans to oil-and-gas companies. It would seem for a ripe shorting opportunity for the Financial Select Sector SPDR (XLF) vs. Cullen/Frost (CFR), but I think that's already become and overcrowded trade.

XLF vs. CFR -- Daily
Yahoo! Finance
View Chart »

The defense sector is rocking here after a 5% decline, and I think is ripe to be bought off the new U.S. federal budget, which shows the first pick-up in military spending since the sequester. I don't want to steer you toward any specific one. They all seem terrific.

Consumer packaged goods are, once again, benefitting from lower oil and gas prices for shipping and packaging, higher yields and a recession overseas. Not a group you have to think too hard about. They are all working into any pullback.

Technology is a little harder. The companies that help make gadgets, namely Cypress (CY), RF Micro (RFMD), and Avago (AVGO) are all benefiting from both takeovers and their ubiquity.

CY, RFMD, AVGO -- Daily
Yahoo! Finance
View Chart »

Micron (MU), Western Digital (WDC) and Seagate (STX) make sense, although on the latter two aren't stalled.

MU, WDC, STX -- Daily
Yahoo! Finance
View Chart »

Big tech and cloud computing, though -- with the exception of Microsoft (MSFT), a pre-split-up Hewlett-Packard (HPQ) and eBay (EBAY) as well as Adobe (ADBE) -- look only OK. It is a "be careful" group.

Again, I want to stress, these stocks all look vulnerable for being so overbought, but they make sense when they pull back to trendline.

And what looks bad? Anything, and I mean anything, even remotely connected to oil and gas, including servicing and industrials and infrastructure plays. Looking less worse is aerospace, where the gas-guzzler comeback must be crimping the long-term trajectory. Extraction tools, solar, coal, copper and iron are all disastrous. Most, honestly, look like they will fail. They are monstrous and could wreck anyone's year. Frankly, I have never seen anything like the destruction here. It is relentless and unbelievable and showing no sign of turning. Again, I think the downside's due for a breather, as is the upside, but others who have waited for one have been wiped out in any attempt to get back to even. The bottom fishers here are legion, and they are dead.

That's pretty much the whole gamut. Special situations: entertainment, cable, boutique industrials, rails, steels and Internet plays are all case-by-case and do not lend themselves to a reading of the charts.

But most are so stark that they are almost pinpoint precision in direction, which is a testament to both the oil crash and the total domination of ETFs vs. individual stocks, which now seem, ex-takeover and restructuring, devoid of purpose.

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

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long MCD, MRK, MSFT.

TAGS: Investing | U.S. Equity | Energy | Stocks |

More from Energy

Don't Waste Energy Divining Energy's Future; Ride With LNG Shippers Instead

Jim Collins
Jan 21, 2021 10:30 AM EST

A hot market for liquefied natural gas makes companies that transport the fuel sensible plays at a time when oil is demonized.

Renewable Energy Group Is Set to Drive to New Highs

Bruce Kamich
Jan 21, 2021 10:08 AM EST

REGI is the nation's largest biodiesel maker.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

Time to Nail Down Some Profits on Halliburton

Bruce Kamich
Jan 14, 2021 10:47 AM EST

Our latest technical analysis and trading strategy for the oil services stock.

A Rising Tide Is Going to Lift LNG Shippers in a Very Cold Winter

Jim Collins
Jan 14, 2021 10:30 AM EST

Also, my take on Jack Dorsey and Twitter, along with Facebook.

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

  • 09:35 AM EST CHRIS VERSACE

    Another Big Winner for Stocks Under $10

    We're ringing the register Tuesday morning.
  • 08:05 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/26/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • 09:52 AM EST GARY BERMAN

    INDU/DIA 20 DMA

    Fibocall: The DIA has the 20 DMA @ 307.81 and w...
  • 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