Cramer's 'Mad Money' Recap: Be an Informed Skeptic
NEW YORK ( TheStreet) -- Are investors too positive or too negative on the markets? That's what Cramer wondered on "Mad Money" Tuesday. Cramer said he prefers to straddle the middle ground and stay an "informed skeptic."
Cramer said the problem with most market coverage is the bears almost always sound more informed than the bulls. This often leads investors to believe the bearish commentators and brush off the bulls as uninformed optimists. But Cramer noted that believing the bears only keeps investors out of the bull markets.
Such was the case during the market decline of 2011 between April and October. After having fallen 17% from its highs, the newspapers were riddled with articles predicting endless doom and gloom. Headlines read of slowing manufacturing and heightened threats from Greece and the rest of Europe. The bears sounded brilliant in their arguments, absolutely brilliant, Cramer said. The only problem was, they were dead wrong.
At the time those headlines were printed in October, manufacturing was already on the rise and the U.S. economy was well on its way from breaking free from the euro contagion once and for all. But for investors who listened to the bears, well, they missed out on a 40% rally in the S&P 500 over the next 18 months.
So while Cyprus may take some wind out of the U.S. economic sails, Cramer said the fact remains that housing in the U.S. is on fire, and that's good news for the home builders and for everything that goes into a home, from doors and windows to electrical and plumbing.
It is also great news for everyone who sells those homes, finances them or moves people in and out of them. It's great for retailers that furnish them. The list goes on and on. That's why it pays to be an informed skeptic, Cramer concluded.
Off the Charts
With the bears fretting over when the Federal Reserve will begin raising interest rates, Cramer used his "Off The Charts" segment to examine what the U.S. Treasury market is signaling for the direction of interest rates. Using the help of colleague Carly Garner, Cramer looked at the chart of the iShares Barclays 20+ Year T-Bond ETF (TLT) .
According to Garner's analysis, long-term Treasures have a floor of support at the $114.59 level and major support at $112.40. Thus, she would be a buyer of bonds for a trade on any weakness. The relative strength indicator, or RSI, is also nearing an oversold condition, further bolstering Garner's views. With the ceiling of resistance at $120, Garner felt the ETF could see $127 a share.
Cramer noted the big money has been betting against Treasuries in anticipation of an upcoming Fed move, but that thesis was foiled by worries over Cyprus, which pushed up bond prices as investors fled to safety.