Wall Street could be set to embark on a bullish run over the next month, CNBC’s Jim Cramer said Tuesday.
Based on analysis from Larry Williams, the renowned stock trader credited for creating a number of market barometers including the aptly named Williams %R momentum indicator, investors should expect the stock market to cycle through a hot streak in September, a steep fall in October and another upswing at the end of that month.
“The charts, as interpreted by the legendary Larry Williams, suggest that it’s time to stop panicking, stop complaining and start buying,” the “Mad Money” host said. “He thinks the cycle of fear and negativity has run its course. So if the averages haven’t bottomed already, they’re going to bottom very soon.”
Williams, the author of nearly a dozen books particularly on stocks and commodities trading, made his prediction by assessing three charts: the advance/decline line, the volatility index and the S&P 500.
The advance/decline line is a technical indicator that tracks the sum of stocks that both rise and fall during a trade day. The line appears to run through a repeating series of rallies and sell-offs over the past year, which Williams relies on to forecast the direction that stocks are prepared to go, Cramer said. The chart suggests the market could rally through the month of September, followed by a drop in October, he said.
“But if his pattern holds true, Williams says you’re going to want to buy again at the end of October, looking at another major run as we head into the end of the year,” the host said.
Turning to the Cboe Volatility Index, or the VIX, Cramer said the veteran technician projects that it’s on the verge of declining. The VIX, also known as the fear gauge, is currently just north of 20 and usually runs counter to the S&P 500. It’s an indicator of investor sentiment.
“It’s a pretty ironclad correlation and it only breaks down when the market’s about to make a major reversal,” Cramer said. “Remember, when the VIX goes down, the stock market goes up. So this volatility cycle suggests it’s time for the S&P 500 to rally … likely through the end of September.”
In the S&P 500 E-minis, which is used for futures trading of the broad market average, Williams found a repeating 80-day cycle in the past 10 months, Cramer said. The chart also indicates that a rally could be in store, although it does not give any insight how high the market could go, he added.
“That’s why Williams says you need to be a buyer here, just as long as you’re ready to ring the register on part of your position a month from now, when these cycles may turn against you,” Cramer said.
The S&P 500 closed Tuesday’s session down nearly 10 points to 2,869.16.
WATCH: Cramer breaks down the chart action
Jim Cramer’s ‘Mad Money’ Recap & Stock Picks Sept. 20, 2019
- CNBC’s Jim Cramer take a look at the week ahead in stock investing.
- The “Mad Money” host explains why he has a good feeling about new iPhone sales in China.
- He sits down with the CEO of cloud-based cybersecurity provider Zscaler to get an understanding of the competitive landscape.
Eye on the market: Ignore the Fed talk next week
Two conflicting forces are working to influence the market and the “bad set” happened to win out on Friday, CNBC’s said.
China’s trade delegation decided to cut short its trip to Washington for trade talks with the United States. The major averages all finished the session down less than 1% as it seemed unlikely the country would resume buying goods from American farmers.
Looking past parts of the economy implicated in the U.S.-China trade war, employment is strong and domestic companies without Chinese exposure continue to have a positive impact, Cramer said.
In the week ahead, the “Mad Money” host advised viewers not to pay attention to Federal Reserve reactions and to realize that the strong domestic economy and internationally-oriented economy are both balancing “on a knife’s edge.“
“That’s the right prism to use if you want to understand this market,” he said.
Projecting iPhone sales and the market’s reaction
A customer inspects two Apple iPhones at an Apple Store in Shanghai, China.
Qilai Shen | Bloomberg | Getty Images
Cramer is bullish about ‘s iPhone potential in China.
The tech titan has been a focal point of the trade war between the United States and China, but the dispute reportedly has not damped Chinese consumer interest in the latest iPhone launch that hit stores worldwide on Friday. Demand for the cheaper of the three iPhone 11 models in China has been .
“Sure, the trade war’s taking its toll on business … it’s just not taking its toll where it was supposed to,” the host said. “That’s why I’m a lot less worried about how the iPhone 11 will sell in China … I’m actually excited about Apple’s prospects in the People’s Republic.”
AbbVie vs. Bristol-Myers — Who made the best acquisition?
A trader works by the post that trades AbbVie on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
A war of words heats up as Zscaler, Palo Alto Networks spar for clients
Jay Chaudry, founder and chief executive officer of Zscaler Inc.
David Paul Morris | Bloomberg | Getty Images
“You know, when paradigm shift takes place, incumbent and legacy vendors are often displaced, Chaudhry said in a one-on-one with Cramer. “They feel the pain and they try to attack everyone,”
Earlier this month, Palo Alto executives made comments to shareholders that sent Zscaler’s stock down nearly 5%. Leadership at the firewall provider said “We displaced” Zscaler as a supplier to a Fortune 50 U.S. retailer and a “major” health care provider in Europe. Palo Alto also took aim at Symantec, and .
Shares of Zscaler are down more than 23% since that day, according to FactSet. The stock, however, is up more than 31% this year.
Cramer’s lightning round
In Cramer’s lightning round, the “Mad Money” host zips through his thoughts on callers questions on their favorite stock picks.
Thermo Fisher: “Oh my, can’t get a better company.”
Kratos Defense and Security Solutions: “That’s O.K. I like that L3harris more … which I think is actually going to get a lot of business, by the way. I genuinely believe that they’re going to get a lot of business with Saudi Arabia because they have the best radar stuff.”
: “I got to see how this thing went from zero to hero because I used to think it was a bow wow, so I’ve got to come back with more information. I don’t want to let you down.”
Bitcoin and S&P 500 are heading to new all-time highs
Talk about a bitcoin bull case.
The digital currency is headed to new record highs, says Tom Lee, co-founder, managing director and head of research at Fundstrat Global Advisors — but there’s a catch some cryptocurrency investors may not be expecting.
“Bitcoin has kind of stalled recently because the macro outlook has stalled. I think, in a world without trend, bitcoin doesn’t go up,” Lee said Thursday on CNBC’s “Fast Money.” “The next big catalyst, I think, is a decisive breakout in the equity markets, because I think once equities break to an all-time high, bitcoin becomes a risk-on asset.”
In other words, according to Lee, as stocks go, so goes bitcoin — at least for now.
“If markets make a new all-time high and we see central banks still supportive, it’s kind of good for liquidity, so there’s … liquidity going into bitcoin,” Lee said. “More importantly, if there’s an interest in acquiring some volatility, that’s where you’re going to see people buying bitcoin.”
With Lee expecting the S&P 500 to climb to 3,125 or higher by year-end, that could mean a major rally is in the cards for the increasingly volatile digital currency. Bitcoin reached an all-time high of $20,089 in late 2017, according to CoinBase.
“[The S&P’s] all-time high is around 3,025,” which it reached earlier this year, Lee said. “I think we’re going to surpass that soon and it would be bullish for bitcoin.”
Lee’s theory is built in part on the historical ties between bitcoin and the equity markets. In the 10 years since bitcoin’s launch, the best years for the S&P have coincided with best years for bitcoin, he said.
“Bitcoin does best when the S&P’s up more than 15%,” Lee said Thursday. “Bitcoin may be ambidextrous [in] that it works well in a risk-on world, but as you start to get nervous, then you treat it like digital gold.”
The last several months have brought about “neither environment,” leaving bitcoin’s fate in the hands of uncertain investors, the strategist said.
“It was a market that looked like it was on the precipice, it looked like it could fall, but it never did, and I think [being] stuck in that trend was bad for bitcoin,” he said.
But before all this occurs, BKCM founder and CEO Brian Kelly expects investors to get a once-in-a-generation chance to buy the popular cryptocurrency, he said in the same “Fast Money” segment.
“I think you’re going to have a massive buying opportunity here,” Kelly said. “We may have already seen it in the [$]9000s, … but there is too much money coming into this market. You’re going to have an opportunity to have a generational buy in bitcoin sometime, I would say, in the next six months.”
Bitcoin fell by nearly 2% on Friday to just above $10,210, according to CoinBase.
Everything Jim Cramer said on ‘Mad Money,’ September 6, 2019
- CNBC’s Jim Cramer maps out what he’s expecting in stock news next week, including economic data from the U.S. and China, along with earnings reports.
- The “Mad Money” host is says Amazon and Campbell Soup are worth buying here.
- Cramer sits down with home decor retailer At Home CEO Lee Bird to hear how the company is managing the impact of tariffs on business.
Cramer’s game plan
Cramer said Friday the Federal Reserve should cut the benchmark interest rate “aggressively” to help cushion the blow from the ongoing U.S.-China trade war.
“Even if the Fed chief won’t listen to the president, he should certainly listen to the bond market, which has made it crystal clear that he raised rates too fast and now they got to come down almost immediately,” the “Mad Money” host said.
U.S. Treasury bonds, with the exception of the 30-year bond, are all yielded less than 2% as of Friday.
Buy the dip in Amazon
Amazon CEO Jeff Bezos, founder of space venture Blue Origin and owner of The Washington Post, participates in an event hosted by the Air Force Association September 19, 2018 in National Harbor, Maryland.
Alex Wong | Getty Images
Amazon‘s stock may have put in a bottom and could be poised to break through the $2,000 price tag, Cramer said.
The host picked back up on the chart analysis from FibonnacciQueen.com’s Caroly Boroden, who in July forecast that equities of the e-commerce behemoth was on the verge of a bull run that would take the share price to new heights. The stock is down more than 4% since that late-July prediction.
Boroden thinks the stock is back in “uptrend mode,” Cramer said, and could have 20% upside in its future.
Campbell Soup “has become investible,” Cramer says
Cans of Campbell Soup Co. Campbell’s chicken noodle and tomato soup.
Andrew Harrer | Bloomberg | Getty Images
Despite Friday’s lower-than-expected jobs number and troubles in the bond market, Cramer told viewers now is not the time because there’s more money to be made in stocks. It’s the prime time to shift investments from cyclical names to slowdown stocks, he argued, whether investors believe a recession is upon us or just to diversify their portfolios.
Campbell Soup, which is the parent company of other household food brands like Pepperidge Farm, Goldfish and V8, is a defensive stock to own because it can work no matter what’s going on in the broader economy, Cramer said. Once a classic pantry play, the business attracted activist investor Dan Loeb of Third Point who wanted to turn things around at the company. The company has since brought in a new CEO in Mark Clouse, whom the host has thrown his support behind.
“With Campbell trading at 17 times next year’s earnings estimates and, still, 3.1% yield, I think the stock is a buy at these levels, and not just for speculation. This thing has become investible,” Cramer said. “And if they stumble? Hey, Dan Loeb’s standstill agreement ends in November, so he’ll soon be able to push for even more changes if they become necessary.”
Shares of Campbell are up more than 36% this year.
At Home CEO on stock price woes: ‘We think the stock is undervalued. It’s an opportunity’
Lee Bird, CEO, At Home
Scott Mlyn | CNBC
Shares of At Home, the home decor superstore, have struggled: down more than 60% in 2019 and nearly 80% in the past 12 months. The stock price rallied double digits in Friday’s session, but it’s down more than $33 from its all-time high back in July 2018.
That’s not stopping the confidence that CEO Lee Bird has in his company.
“We feel like we’re undervalued. We’re a high-growth retailer. We grew 19% last quarter. We continue to gain share. We’re profitable. And we’ve got a whole lot of white space in front of us,” he said.
“I’ve been buying at different times throughout the past three years and I still think it’s a great opportunity,” he added.
The company has been caught in the crosshairs of the U.S.-China trade war. Cramer asked Bird about his plan to dodge further escalation in the standoff between the world’s largest economies. The chief responded by saying “we’ve had a playbook. We’ve been working on this for a year now. We’ve had a lot of experience with it.”
Lululemon has the experiential factor that brick-and-mortar retailers need
Lululemon yoga class.
Lululemon on Thursday reported a blowout quarter — earnings per share was 96 cents against an 89-cent analysts estimate and revenue was $883.35 million compared to an expected $846.83 million.
Cramer credited the results to the athleisure wear brand’s “experiential factor.”
“I mean real experiential. Not the kind of faux, all-talk experiential that everybody in the industry claims they have. Lulu’s got it, and they’ve got it for real,” Cramer said. “And that’s how you can put up 15% same-store sales growth, and it’s why their stock remains a buy, even though it’s already up more than 60% for the year.”
Cramer’s lightning round
In Cramer’s lightning round, the “Mad Money” host opined on caller questions about their favorite stock picks of the day.
Neogenomics: “Neogenomics is another one of these diagnostic companies that might have something that could work against cancer. I have yet to say no to any of those. I think that it is a good spec … because that is the holy grail.”
Yeti: “I am going to say: up 100% for the year, I am not going to push it here. I’m not.”
Disclosure: Cramer’s charitable trust owns shares of Amazon.
Latest News7 days ago
Three options strategies for the week: September 16, 2019
Strategies & Ideas7 days ago
Weekly Stock Market Recap – Sep 15th 2019
Latest News7 days ago
Chevron CEO says attack on oil facilities shows ‘risk is real’
Forex7 days ago
Inflation Report Due Ahead of BOE Meeting; Brexit Talks Ongoing
Forex7 days ago
All Eyes on Fed Rate Decision, Forward Guidance
Latest News13 hours ago
MasterCard’s stock rallies nearly 50%, boosted by strong consumers
Latest News6 days ago
Microsoft, Apple may soon lead Wall Street to new heights
Forex5 days ago
Euro Braces for ECB, Draghi. US Dollar Eyes CPI Data