Cramer's 'Mad Money' Recap: Opportunities Abound (Final)
Cramer used today's weakness to once again educate viewers on the mechanics of the stock market and what really makes stocks rise and fall. He explained that today's markets are primarily driven by large money managers and hedge funds, funds that are so big they simply can't invest in many small to mid-cap stocks without practically buying the entire company. So what do these gigantic funds invest in? They invest in the market as a whole, said Cramer, using instruments like the S&P 500 futures.
Cramer said the advent of futures trading has changed the dynamics of the markets, as many funds now look toward Europe in the mornings and place their bets on the U.S. markets based on how Europe is about to close for the day. That means if Europe is having a bad, the U.S. is likely to follow.
But that trend also creates opportunities, said Cramer, opportunities like Ross Stores (ROST) , a discount retailer that has exactly zero exposure to Europe, but still saw its shares slide over $1 a share simply because it was part of the S&P 500.
Cramer said stocks like Ross, along with many regional banks, are excellent buys on days when the markets are taking no prisoners. He advised viewers to buy in stages, buying additional shares if the markets continue sinking. Cramer was also bullish on growth stocks like Lululemon Athletica (LULU) , Celgene (CELG) and Chipotle Mexican Grill (CMG) .
Executive DecisionIn the "Executive Decision" segment, Cramer once again spoke with Sandy Cutler, chairman and CEO of Eaton (ETN) , a stock he owns for his charitable trust, Action Alerts PLUS. Shares of Eaton are up 9% for the year and yield 3.2%.
Cutler painted a mixed picture for Eaton, saying that while the company still expects sales to be up 7% for the year, with profits up 14%, they see challenges in many overseas markets. Cutler called out Europe in particular, noting that forecasts for a third-quarter recovery in Europe are now expected in the fourth quarter.
Cutler was also bearish on the Chinese recovery, as loosening credit and lower interests rates have yet to spark renewed growth. Brazil also remains a weak spot for Eaton, noted Cutler, with sales expected to be down 10% for the year.
Turning to the U.S., however, Cutler was more bullish, saying that the company's largest division, electrical systems in the Americas, is seeing continued growth and recovery in the construction markets. Cutler predicted a multiple-year expansion in U.S. construction.