Cramer's 'Mad Money' Recap: Pay Attention and Prosper
NEW YORK (TheStreet) -- The markets are as "dumb as plywood," Jim Cramer told "Mad Money" viewers Tuesday.
But that's a good thing, because it means that anyone paying attention can profit from it.
Case in point: A 271-word press release from truck engine maker Cummins(CMI) , which, just after 1 p.m. ET Tuesday, single-handedly took down the entire Dow Jones Industrial Average.
Cramer said the press release starts out simple enough, with yet another dividend boost from this best-in-show company. But then things turn ugly when the release announced lowered full-year revenue guidance from up 10% to just in line with 2011 levels.
Cramer said for a growth stock like Cummins, the lowering of revenue forecasts is a death blow. It signals that the world is either slowing or the company's best days are behind it. In the case of Cummins, the company continues to innovate and take market share from rivals like Navistar(NAV) , so it's clearly not a company in decline -- which means that yes, the world's economies are indeed slowing more than forecast.
But was the Cummins news really news? Could investors have seen it coming and avoided Tuesday's, and likely Wednesday's, losses? Cramer said they could have if they were listening to the Alcoa(AA) conference call Monday night.
He said on that call, the aluminum maker told investors that demand was slowing more than forecast. It practically wrote the Cummins press release 12 hours in advance.
Cramer said opportunities like today's can easily be spotted if investors have their eyes open and are paying attention. There will be dozens of companies reporting in the coming weeks that will forecast the fates of countless others. Pay attention and prosper, said Cramer.
Off The Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Scott Redler over the chart of Facebook(FB) , the IPO disaster from two months ago that might finally be worth owning.
Redler used a chart of Facebook's first three days of trading to illustrate how supply vastly overwhelmed demand for the hotly-anticipated initial public offering.