Cramer's 'Mad Money' Recap: Stop, Look and Listen
Cramer said the stock movement of companies such as Verizon (VZ) , Johnson & Johnson (JNJ) and DuPont (DD) , which he owns for his charitable trust, Action Alerts PLUS, exemplifies why it's too risky to trade during earnings season. Investors are trading on every bit of news, even if its totally wrong.
Cramer said he initially saw nothing wrong with Verizon's earnings release this morning, yet the earnings were reported as a "miss" and shares sank. During earnings season, he explained, there's no room for just "OK" -- you're either great or you're dead in the water. Yet, by the time the company conducted its conference call and reassured investors margins would be improving this year, shares rallied.
The same was true with Johnson & Johnson, said Cramer. The company issued better than expected results, only to see shares sink on perceived weak guidance. But shortly thereafter, investors focused on the right metric -- the company's spinoff of one if its divisions -- and shares shot right back up.
DuPont was yet another example; that stock was down in the pre-market, only to end up 1.7%. Cramer said with results like theses, it's impossible for him to say whether a stock will be going up or down based on earnings. That's why he continues to caution investors that earnings season is the worst time to try and make money in the markets.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carolyn Boroden over the chart of S&P 500 to see if Boroden can continue her winning streak at predicting where the index is headed.
Cramer reminded viewers that Boroden successfully called the top in the S&P back in September, along with the lows in mid-November. With the index now approaching her latest target of 1,510, Cramer wanted to know what was next.
According to Boroden's analysis, if the S&P can rise above her 1,510 target, the next stop won't be until 1,551 to 1,555. She said the weekly chart of the S&P also has a cluster of ratios that fall into the same range. Boroden noted that only if the markets fall below the November lows of 1,343 would she be concerned.
Cramer said he agrees with Boroden's research, especially given how she's nailed all of her S&P targets over the past few months. He said the markets may pull back soon after their big run to the upside, and that would be the perfect time to buy into the markets.