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Charts suggest markets could soon get a deep correction



CNBC’s Jim Cramer said Thursday that his colleague is warning that danger could be on the horizon for the stock market.

The “Mad Money” host took a look at chart analysis as interpreted by technician Carolyn Borogen, Cramer’s coworker at who also runs, to understand what could come of this volatile market.

The major U.S. averages were taken for a ride this week as investors attempted to gauge whether the United States would raise existing tariffs on imports from China on Friday. Because of this uncertainty, the best way to get an empirical reading of the market is through studying chart action, Cramer said.

The high-to-high cycles, as explained by Boroden, in the weekly chart of the S&P 500 is cause for concern, the host said.

Highs on the index have ranged between 31 weeks and 36 weeks, and the most recent peak was recorded last Friday, he said. Prior to that, the last major high was set in September, which preceded the stock sell-off in October.

Markets tend to repeat themselves, and because stocks sold off this week after a big run, Boroden thinks there could be cause for concern.

“In fact, she’s looked at a series of previous high-to-high cycles, and what she’s noticed is that there’s a whole confluence of them coming due this month,” Cramer said. “That’s why she’s throwing up a caution flag, because Boroden thinks we might finally get a deep downside correction — even deeper than what we’ve already experienced during hell week.”

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Retail earnings reports, China trade impact




CNBC’s Jim Cramer on Friday said he expects more of the same in the week ahead of stock trading.

“Next week, once again, is all about trade and retail,” the “Mad Money” host said. “This is the week when most retailers report, so we will be listening closely to what they say about the trade war.”

Monday: Trade watch

The stock market will confront the same issues on Monday as the week prior. The days following will see a lot of retailers hold conference calls, and Cramer is looking to see what they have to say about tariffs on Chinese imports.

“The market will punish companies that source in China and reward companies that don’t, because that’s what [President Donald Trump] is doing,” he said.

Tuesday: Home Depot, TJX, Nordstrom

Home Depot: The home improvement retail giant reports earnings before the bell. Cramer is expecting weather to weigh on earnings again.

“There’s much too much rain this gardening season, and I bet that hurt them,” he said. “I still believe Home Depot can tell a decent story about trade, but it won’t matter if gardening season, their equivalent of Christmas, turns out to be a bit of a bust.”

TJX: The T.J. Maxx parent delivers its quarterly results to shareholders in the morning.

Nordstrom: The luxury department chain has an earnings call at the end of trading. The stock is down more than 20% this year and more than 27% in the past 12 months.

“At these levels, it pays you a 4% yield. I think it may be too cheap to ignore,” Cramer said.

Wednesday: Lowe’s, Target

Lowe’s: Lowe’s, the main rival to Home Depot, presents its quarterly earnings before the market opens. CEO Marvin Ellison is guiding the home rehab chain through a turnaround.

“Wall Street loves Ellison, though,” Cramer said. “If Lowe’s gets hit, either before or after the quarter, I’d be a buyer of the stock.”

Target: Target comes out with its latest results before trading begins. The stock is about $20 per share off its September high and has a 3.6% yield.

“I know it’s battling both Walmart and Amazon, which might be too much competition for any one company, ” Cramer said. “But I think CEO Brian Cornell’s doing a terrific job. You know what, I like the stock here.”

Thursday: Best Buy, Splunk

Best Buy: The tech gadget store reports earnings in the morning. The stock is up 30% this year, and Cramer is warning not to take a chance on it at current levels.

“I’m betting they’re going to have to talk about tariffs on the whole darned conference call,” he said.

Splunk: The software analytics company, one of Cramer’s “Cloud King” stocks, presents its financial report after the market closes. Cramer expects Splunk to put up a good conference call out of CEO Doug Merritt. He said Merritt continues to deliver on promises.

“I like it a lot. … [It’s got] no China exposure — I say buy,” he said.

Friday: Foot Locker

Foot Locker: The shoe retailer will lay out its quarterly report for investors before stocks start trading. With a presence in shopping centers across the country, Foot Locker carries Nike, Adidas, Under Armour and a range of other sports apparel brands in its stores.

“The stock’s been held back by trade war worries,” Cramer said. “I bet it will prove to be immune, or at least more immune than most people think.”

WATCH: Cramer breaks down the week ahead in earnings

Disclosure: Cramer’s charitable trust owns shares of and Home Depot.

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These 6 stocks could make or break the S&P 500’s run




Call them the Supersized Six.

Microsoft, Amazon, Apple, Alphabet, Facebook and Berkshire Hathaway — six of the most highly valued companies in the S&P 500 — don’t just boast the index’s biggest market caps.

In fact, those six companies are worth about as much as the bottom 290 companies in the S&P combined. Taken together, their market caps total $4.2 trillion, while the bottom 290 S&P companies are worth roughly $4.3 trillion.

It’s fairly common knowledge that the top 50 S&P stocks are worth more than the bottom 450, and it’s not unusual that the market is frequently this “top-heavy,” says Carter Worth, chief market technician at Cornerstone Macro.

But the concentration in these six names is noteworthy, and it could mean trouble for the market, Worth said Tuesday on CNBC’s “Fast Money.”

Considering the influence they have over the S&P’s direction, it makes you wonder: “Is it an index, or is it a few big names that drive everything?” Worth said. “That’s what makes beating the index so hard.”

He called attention to this chart tracking the six-stock basket against its 150-day moving average, as well as the number of times it has traded above or below that average.

“Literally, every single time we have gotten this far above the 150-day moving average, we have peaked. It is right at that level yet again,” Worth said, pointing to the uptick in the bottom panel’s trend line. “So, as this goes, so goes the market. I think you’ve got a crowding that’s not so good. Just to put it in real context, think of those six names relative to the S&P. It’s all so dependent on these big names.”

Moreover, while the market’s “heavy hitters” have made up 15% of the S&P’s total market cap, on average, since at least the 1990s, that percentage is also ticking up, Worth noted.

“We’re starting to get back to a level that is typically indicative of when markets peak. That’s ’07, so forth and so on,” he said. “None of this is particularly healthy.”

By market cap, Microsoft is worth about $963 billion, Amazon is worth $949 billion, Apple is worth $969 billion, Facebook is worth $540 billion, and Berkshire Hathaway is worth $515 billion.

The broader market mounted a recovery Wednesday, with the S&P lifting off its Tuesday lows early in the session.

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What to expect with earnings, Friday’s jobs report




A slew of companies have reported earnings in the past week, but the busiest week of reports is still ahead, CNBC’s Jim Cramer said.

News that the domestic economy grew by 3.2% in the first three months of 2019, faster than the expected 2.5%, helped move the Dow Jones Industrial Average and Nasdaq Composite up more than 0.30% and the S&P 500 north 0.47%, he said.

“But make no mistake about it. We are in the heart of earnings season right now, and that is what’s really driving the action,” the “Mad Money” host said.

More results are set to come out next week, including the jobs report for the month of April.

Here’s what Cramer will be watching on the market next week:

Monday: Disney’s ‘Endgame,’ Alphabet

Disney: While Disney isn’t expected to report quarterly earnings until the following week, the box office numbers for “Avengers: Endgame” will roll in on Monday. Cramer said he has never seen a more anticipated sequel, or such a stock rise, as the entertainment conglomerate heads into the potential $1 billion weekend opening.

“The run was breathtaking, and I bet Disney can keep climbing if “Endgame” beats the billion-buck bar,” he said. “Otherwise, yeah, let’s accept the fact that after this run could be ripe for a little profit-taking.”

Alphabet: Google’s parent delivers quarterly earnings after the market closes. Cramer said he is expecting an upside surprise, and investors want to find out how ad sales are going and how much can be made from YouTube’s premium subscriptions.

“I also want to find out if Google Cloud can really rival Amazon Web Services … and Microsoft Azure, another great player,” he said. “It’s a very important quarter.”

Tuesday: Apple, General Electric, General Motors, Advanced Micro Devices

Apple: The iPhone maker will host a conference call with shareholders after the bell. Installed base data is more important than phone sales, as the company creates a new identity and digs its feet into the subscription economy, Cramer said.

“I am concerned that there’s too many Johnny-come-latelies in this stock – camp followers who bought it north of $200, it closed at $204 – and these summer soldiers, these sunshine patriots, they won’t be satisfied no matter what Apple says, ” he said. “So don’t pay too much attention to the action. Pay attention to the substance.”

General Electric: The once-dominant manufacturing conglomerate reports earnings in the morning.

“I think CEO Larry Culp is doing an incredible job, I’m one of his biggest backers, but he’s not Hercules, and these stables still need a lot of cleaning,” Cramer said. “This is the quarter where Culp needs to find a way out of the power box.”

General Motors: GM releases earnings data before the market opens.

“I expect a lot of money to pour into GM because last night, as I predicted here, Ford delivered a huge upside surprise, ” he said. “That could be a very mistaken extrapolation.”

Advanced Micro Devices: Shareholders will hear from the chipmaker at the end of trading. Investors will learn from the call if Intel’s challenges are isolated, Cramer said.

“In many cases, Intel’s pain could be AMD’s gain — I think they could be taking major market share,” he said. “We’re gonna find out when we listen to CEO Lisa Su’s tale of the semiconductor tape.”

Wednesday: CVS, Estee Lauder

CVS: CVS gives earnings results before the bell.

“We’re gonna find out how that Aetna merger’s working,” Cramer said. “Maybe that can get the stock moving away from its 52-week low where it seems to be a denizen.”

Estee Lauder: The cosmetics company has an earnings call before trading opens. Cramer expects CEO Fabrizio Freda to put on a clinic.

“If you want to know what makes for a great conference call, listen to Estee Lauder, because a great conference call often means a great stock from a great company searching for you,” he said.

Thursday: Dow Chemical,

Dow Chemical: The chemical maker will have its first earnings call since spinning off from DowDuPont earlier this month. The stock has a roughly 5% yield.

“Dow’s former parent also reports. I think you’re actually getting a gift with Dow’s very safe dividend,” Cramer said.

Friday: April employment data

Non-farm payrolls: The U.S. Labor Department will release employment data for the month of April. Cramer expects the numbers to be strong, but worries it could trigger analysts to call for the Federal Reserve to adopt a hawkish monetary policy again.

“Don’t listen to these people,” Cramer said. “Stick to your knitting.”

WATCH: Cramer delivers his game plan for the week ahead

Disclosure: Cramer’s charitable trust owns shares of Apple, Alphabet, Dow Inc, CVS, and Walt Disney, Microsoft, and Amazon.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

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