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  Opening Segment #1:
Cramer's Game Plan for Next Week
  Friday, July 1, 2016
 
 

 

   
 

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Jim Cramer's Game Plan for Next Week, and General market comments, below... 

 
 

Note:  Given the importance of the Game Plan for next week, we have recapped it completely verbatim: word for word, for your benefit, below...

   Jim's Quotes from this segment:  

Jim:
          
The next time you feel like panicking… the next time you're thinking about selling into the crowd… think about what happened this week, and remember that panic is never a strategy, given that we ultimately end of the week on A positive note, with the Dow gaining 19 points, the S&P advancing 0.19%, the NASDAQ climbing 0.41%... the fourth straight up day in a row and, amazingly, the best week of the year. Still, people certainly panicked on Monday. That was the second big down day after Brexit. Monday was the seventh biggest day of redemptions, pulling money out of the stock market, in the last 10 years. Seventh which, of course, includes the entire financial crisis of the great recession, with $9.5 billion pulled out of the global equity fund.

 

Jim:    I find this just to stick infuriating because, no matter how hard I preach that nobody ever made a dime from panicking… and the selling on Monday was pure panic… come on it was… he pulled just can't take it. They don't know what they own. They fear their own portfolio. And they don't know how to stay put, let alone do some buying.

Now I'm not minimizing the impact of Brexit on stocks in general, but it was right to minimize its impact on US stock specifically. The actual bottom line of companies away from the banks, which did get her because interest rates went down dramatically, and the banks need them to be higher, was in sum total of little significance.

However, we caught a classic emotional rout. The 5% exogenous decline that, when it ran its course, you had to buy, not sell, into, as we did fortunately with some of the money for our charitable trust. Or at least you had to stay put.

Alright, what were the news cues that the market was going to bounce? Frankly, they weren't that obvious. Most of the people who came on TV were quoted as kind of, I think, pretty alarmist. They made ill advised comments and scared a ton of people. Hence the massive redemptions. You know, those redemptions occurred because people said and wrote look, you've got to get out… that's how it happens. They scare people. But the stocks? What did the stocks say?

Well you know what? I told you a different, more positive story, by midday Tuesday. That's The day that spawned this remarkable counterintuitive rally... the first day that we didn't have Brexit on the top of our minds. And anyone who did focus on Brexit that day had sellers remorse about how little impact it really seemed to be having on US companies and their stocks.

First to bounce? Well, it was FANG, right? The FANG stocks… that's what they want to do. They have growth even in a recession. And a recession is the big Brexit fear.

Facebook was a pure recovery after a couple of nasty days, and it didn't actually act that well after, but it did recover. But Amazon and Netflix were pushed hard by analyst every single day this week. And they both just kept roaring higher and higher, right into tonight's close. Google has become a quandary; it's become so unloved that we postulated mid week that it's time to give it the boot from FANG, and replace it with Ulta Salon or Broadcom, or both. Thank you for giving us some ideas on Twitter about that.

Now, either way, they staked out their uber growth bona fides in a no-growth world, and their stocks roared higher.

Next, by the end of Tuesday's session, the recession proof names came on. And now I am thinking about things like Clorox and Altria, The giant tobacco company. We saw them tick up in the last hour. By Wednesday, the vast bulk of investors actually started to realize that maybe Brexit has got a positive spin – it's going to keep the Fed from tightening. But the stock competition – the bond market – just became less competitive, as they were furiously bid up by those seeking safety, in a world where the European Union might be unraveling. And when you bid up bonds, that lowers their yield. And in this case, it did it dramatically.

Since then, we've seen a parade of buyers flying in, and short-sellers covering from all different directions, and the best week of the year developed. The run has been so good since the Brexit low, that I have to tell you, it may be too good. And for those who had the temerity to come in near the bottom, you know what wouldn't be such a bad idea? No one ever got her taking a profit. Maybe you do a little ka-ching, ka-ching and take a little bit off the table.

But if you haven't bought yet, now you've got to wait. I can't countenance coming in after a gigantic run, ahead of what might be a difficult earnings season, given the propensity of the dollar to go higher again, thanks to the Brexit-induced weakness in the pound, and the stubborn slowness in Asia and South America. Sure, if you can find something that didn't rally big, I will bless that or even something that was down. But let's not get too cute.

Now you have to believe apropos of our game plan for next week that we're likely to get at least another exogenous event this week that could cause the averages to sell off by a percent or two. I mean something that's definitely worth waiting for. Because when you see what's up ahead, you know that there's something looming at the end of the week that could cause some weakness.

MONDAY

Happy Independence Day

Next Monday is our Independence Day, and I'm wishing you a terrific Independence Day right now. But these days, we are focused on another independence day, and that's Britain's independence from the EU. What do we see? What do we want? How about the stabilization of the weakest group over there – the stabilization of the stocks of the Lloyds bank, which I actually think is an attractive speculation, okay… of Barclay's, and of the Royal Bank of Scotland. That's actually a ward of the state. Don't even go near that one.

These British banks are at the epicenter of what went wrong with Brexit, but I am heartened that their bonds… all banks finance lending by raising some capital, and a lot of times through the bond market… I am really, I'm telling you, I was actually quite cheered by how well their bonds traded. Hence why I say that maybe Lloyd's, which trades here under the symbol, LYG, might be a decent ticket to punch. Hey, it went out at $2.97. I don't know, kind of intriguing.

Diageo, PLC
Away from the banks, what are we doing? We're watching some of these big British cap stocks that did very well, the large caps, because they export so much. So I am going to watch Diageo as the play here. It's a remarkable situation when you think about it. It's a British seller of liquor, of spirits, that just had its price cuts by 12% versus all others, thanks to the huge decline in the pound. Do you know that 90% of Diageo's Scotch... Think of Johnny Walker red green blue… You know, their gold and black... Think about what does sales are going to be like… 90% overseas, and cheap pounds.

TUESDAY

Mondalez, Inc.
Hershey Foods, Inc.

Tuesday, I'm expecting that we might see a more fetching bid for Hershey from Mondalez, the spurned cookie and candy… that's Cadberry's suitor... who badly needs to buy Hershey in order to jumpstart its own growth. I know that this deal will be hard to pull off, because the Hersey trust holds the cards, not the common stock shareholders. But at the right price, you know what? I actually think it can happen, and I know that's contrary to what a lot of people said today. I would hold onto both. The first bid, at $107, was clearly a nonstarter. I think Mondalez can easily pay $130 and maybe make it work. Yes, it's that good of a fit. I think that you haven't heard the last from this one. I hope we hear something when we come back from the holidays.

WEDNESDAY

Walgreens, Inc.

Wednesday Walgreens reports, and the word is that it might be a bit light. You get the services that say that. Remember, Walgreens owns Alliance Boot, which is a very big operation in the UK and, with the weaker pound, I suspect numbers might have to come down. The stock, which my
charitable trust owns, may not be able to handle it yet, but you know what's more important? Walgreens is trying to Close on its acquisition of Rite-Aid. I'm beginning to lose faith that the FTC – the Federal Trade Commission – will let this deal happen, given how the government has become vehemently antitrust lately. And Walgreen's buying of Rite-Aid takes out a major competitor. Maybe we'll get some clarification of what Walgreens is willing to sell in order to get the deal done? I just wish that they would fill or kill on this one by now. It's starting to just weigh on all of us.

THURSDAY

PepsiCo, Inc.

Thursday we hear from PepsiCo. And I think we are going to get another classic growth story, maybe even a beat and raise, from Indra Nooyi, the CEO who's turned this company and to the fastest-growing large cap consumer products enterprise in the world. Now, I know some of you are worried about soda taxes like the one that just passed in Philly, and others are worried about weak diet drink sales. I think that PepsiCo has got those under control. And more importantly, they've got Frito lay, and that is the king of snacks, and that's where the growth is. There's some speculation that PepsiCo might be interested in Hershey. I think that with her current lineup, Nooyi doesn't need to think about it, doesn't need to change a thing. Why mess with the best? That's why we own PEP for my charitable trust.

FRIDAY

US Jobs Report

Friday we get the big bad Jobs Report, and this could be crucial, which is why I said that there could be an exogenous event. You see, we know that the Fed is on hold, right, or thought to be on hold, because of Brexit. But believe me, if we get a strong employment number here, no one is going to be talking about Brexit. They'll be talking again about rate hikes. That chatter is never going to go away. Last night, when we spoke to Marty Mucci, the CEO of the fabulous Paychex, which had a big day yesterday, we heard a positive story about job growth. They ought to know. They actually make up of the paychecks. With this economy, anything is possible. But be aware I think that Paychex's Survey doesn't take into account enough weakness and retail, banking oil and technology. It's too early for me to get a read right now on the employment number.

So here's the bottom line…

▼   ▼   ▼   ▼   ▼

I want everyone to have a healthy and happy 4th of July, the independence day of our country. Then gear up, because earnings season beckons, and that means fireworks and a bit of a letdown after the whirlwind short covering post-Brexit Best week of the year rally.
 

Our convenient streamlined recap format:

New feature!
Convenient direct video link for just this segment here:  Video link (new window)...

[end of segment]

 

 

Note:   Pertaining to these stock recommendations & any other, Jim Cramer recommends that we do our homework before investing.   We've provided a free workbook at this StockHomework101 site for this,   here >>

 

  UPDATED!  BOUGHT Home Depot & KeyCorp ::  SOLD General Mills and Coach - for the ActionAlertsPlus portfolio!...  
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  New FREE stock homework website and workbook...  

[end of segment]

*Note:  An asterisk next to a stock indicates that Jim owns it currently for his charitable trust.  If you are interested in a particular stock, Jim Cramer recommends that you always do the homework on each stock, and that you wait at least one trading week after his show recommendation to evaluate whether it is a good stock trade or investment for you. 

Market Results today:

Dow:  + 19

Nasdaq:  + 20

S&P 500:  + 4

 

    4    

 

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