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  Opening Segment #1:
Cramer's Game Plan
for Next Week

 

  Friday, June 1, 2012
 
 

 

   
 

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STOCK
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General market comments, below... 

 
 

   Jim's Quotes from this segment:  

Jim:
          
On a day like today, where the Dow plunged 275 points... a terrible start to a new month, after a miserable May... any Game Plan worth its salt has to start with a plea for help. These are extraordinary times, and they require a different kind of Game Plan than what we usually do here, because we always start the Game Plan for next week with what happens on Monday. The thing is, we can't wait that long. We need something to happen Sunday. And that's what these cries for help are signaling.

We need something to happen, like President Obama and Fed Chief, Ben Bernanke, calling the leaders of Europe and saying, hey guys, look... you're bringing down the whole darn world, including now, judging by our mediocre employment report, our own country. You're bringing it down with your squabbling and your indecision. You've got some hard choices to make, Europe. We will help you make them. But you must make them. Because we're all about to be pulled down into a recession, because of your dithering. Obama and Bernanke have to be able to tell these leaders, we will be willing to give your central bank a credit line from our Fed, if you would simply issue euro deposit insurance to all the banks in your universe, so the money doesn't keep flying out of the weaker countries. That's what's happened in Spain and Greece. The money's been flying out of there, going into German banks.

Further, Bernanke and Obama have to say they will extend a credit line toward of euro bonds, to buy the sovereign debt of countries which are at least trying to grow their economies, despite Germany's endless calls for austerity. The President and the Fed Chief must say, we want to be part of any Marshall Plan that brings back growth to Europe. But you definitely need to start a Marshall Plan. Yes, that's how horrible this employment report was today. It's got us pulled down too!

And if the calls aren't made... what happens if nothing happens on Sunday? What happens if Sunday comes and goes, and we come in here on Monday and nothing happens? Well, then you'd better get used to action like today, because we're going to get a lot more of it. After this jobs data, we need to accept the fact that our markets have to go lower... meaning interest rates are going still lower for bonds. And prices for many, many stocks are going to go lower too. Not all, okay... but many.

Does this mean we should give it up? Should we give it up and go home? Does it mean there's nothing worth owning at all? We have to sell, sell, sell everything?

First off, to anyone who wants to do that... okay... I understand. I'm not going to defend it. I'm not going to defend this market. I mean, I trace out every night a series of embarrassing events of late... from our government's failure to do anything to help the U.S. economy, republicans or democrats, the farce of Europe, the Facebook IPO fiasco and, of course, all the interconnected banks that claim that they're not. These matters instill zero confidence, and I can't blame anyone for wanting to sit this one out. Hey,
my charitable trust has the highest cash position since it started. I get it.

On the other hand though, I've got a job to do... whether it be for charity, or whether it be for this show. I'm supposed to be, and will take the mantra, to be searching for that bull market somewhere, because it's always been there. And unless you simply pay attention to nothing but the averages... just if you look at the averages... then you don't know it, but there have been some incredibly raging bulls going on. They're just smaller, they're more contained, and increasingly threatened. And they weren't visible today. But they will, I believe, withstand even this difficult test, if you're willing to take some short-term pain to get to the ultimate gain. Because boy, have we ever talked about a lot of stocks on the show this year that are making you a lot of money.

Where are the bull markets? Contained, threatened, but here's the segment...

Largely domestic companies with dividends that yield well in excess of treasuries. Companies that also are beneficiaries of the staggering decline in commodities, and that should not expect their growth to be crimped, if it wasn't crimped in the dress rehearsal for this market, which was the Great Recession of 2008.

Okay, it's a smaller group of stocks than we'd like. It's a more difficult dart board. If we work hard, we'll find the right stocks. But buying treasuries isn't really investing right now. For most, given the transaction costs, the only reason you buy treasuries is because you're worried that your money would be stolen if you kept it in your house.

So, with these criteria in mind, let me give you a Game Plan. I'll tell you how I'm going to look at stocks for what to buy. Yes, we know all the areas that are not covered by that, and those areas are vulnerable. They're not domestic, okay. They're all vulnerable. But you know what? If we get the important calls, it's going to change. And if we don't get the important calls this weekend, the market continues to go down.

MONDAY

Johnson & Johnson

First, starting today, here's a non-economically sensitive conference that we're going to be paying attention to. It's called the American Society of Clinical Oncology meetings. It started today and it runs through next Tuesday. And we're going to be looking for companies with breakthrough drugs that they don't get any credit for, because the global economy is so horrid that no one's paying any attention. But we are. We're going to pay close attention to Johnson & Johnson, which fits our criteria for a stock that can stay afloat here, and also has terrific exposure to cancer drugs.

Celgene

I'm going to be listening to Celgene. Why not? They've been the best way to play the endless war against cancer, and the stock was hammered today. It could be an attractive opportunity.

Dollar General

But when it comes to actual stocks that report earnings, which is what our Game Plan usually focuses on, we want to listen closely to Dollar General. Why? Because one of the best-acting stocks in the world right now is Walmart, up 21% year over year, and 10% year to date. Always a bull market somewhere? Hey, I mean, the largest retailer in the world? 10% year to date? I'll take that. A lot of what has happened that's good at Walmart, because they had the best numbers in two years, because they figured out how to beat stores like Dollar General... they beat them at they're own game now. Any sign that Dollar General acknowledges this trend will be a good reason to buy Walmart on weakness, although it was barely down today, off 27 cents. I'm interested in stocks that only go down 27 cents on really horrible days, because they tend to go up a lot on good days. And there are good days.

TUESDAY

Ulta Salon

Remember, there are also always money managers who are looking to buy growth wherever they can find it. So that means we have to pay attention to a smaller company that you may, if you are a close watcher of the show, you have definitely heard of... Ulta Salon. They reported an amazing number last time around, one of the many great quarters in a row that have caused this stock to rally tremendously. Okay, always a bull market somewhere? How about a 60% year over year gain with this one? 33% year to date. I still want those gains. I don't want that 1% the treasuries are giving you. You know me. I think you want to own a growth stock in your portfolio... even now. Let Ulta be your guide as to how much the market values growth in this environment. Oh, and when people whine about the bear market, can I just say... would you really have rather hidden cash, or in an Ulta Salon?

WEDNESDAY

Crude Inventories

Wednesday brings us crude inventories, okay. Look, one of the underlying themes of this market that I think is so mystifying is oil. Oil is in free fall. It's down 24%. Pretty much in a straight line. Remember, we know that oil is becoming an asset that's bought and sold my hedge funds these days, not just something you use to fuel your car. Now at some point, this market is going to have to recognize the positive side of cheaper oil. There's been very little recognition so far. Right now, the market only cares that oil weakness must be some sort of portend for economic weakness. If we see a draw down in oil, that tells us that usage isn't falling off a cliff. Remember, that's what you find out on Wednesday. And we might be able to find a bottom for one of the worst-performing assets on earth. At this point, as counterintuitive as it may seem, a stabilization of oil... which of course will make it so that we have to pay more at the pump... would be good for the stock market. Yes, we need it. It's that counterintuitive right now.

THURSDAY

Lululemon

Just as we'll get a growth "gut check" with Ulta, we're going to have the same thing with Lululemon on Thursday. Lulu's one of our favorite fast movers that has come down and come down hard, with the rest of the market. That always happens initially to the growth stocks in a big selloff. If this one can rally after reporting a good number, you're most likely going to see growth stocks as diverse as Starbucks, Panera, Chipotle, and even Apple rallying. And you want to be mindful of that growth elixir impact. They all trade together, okay. It seems weird, because they're in different segments, but they all have high growth. And those stocks trade together.

FRIDAY

Finally... Fridays, from now on... they're going to take on tremendous significance. If nothing is done this weekend to stem the declines, you're going to get a bad week next week... a bad week. You can presume that, a week from now, we'll be playing out the exact same tune you're hearing today. "Will they do something this weekend?" If not, the market's going to go lower.

Here's the bottom line...

▼   ▼   ▼   ▼   ▼

Will our leaders, and those in Europe, act this weekend, after this horrible unemployment number? Will they respond to the market's obvious cry for help? It will be the refrain that lasts until either something significant happens, or most stocks have fallen so low, that it no longer matters. Obviously, you know I favor the former. We're going to keep finding those bull markets wherever we can, even as... after today's miserable employment report... we know our job just got much, much tougher to do.

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[end of segment]

Read Jim's next Segment here  

 

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 >>

 

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[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:  - 275

Nasdaq:  - 80

S&P 500:  - 32

 

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