Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday November 8.
The Hottest Chart in Tech: Google (NASDAQ:GOOG). Other stocks mentioned: MEMC Electronics (WFR), TriQuint (TQNT), Qualcomm (NASDAQ:QCOM), Broadcom (NASDAQ:BRCM), Skyworks (NASDAQ:SWKS)
Even after reporting a fantastic quarter, Google (GOOG) looks ready to charge higher, according to both the fundamentals and the charts. The stock gapped higher last month after its successful quarter, only to trade in a tight range between $580 and $600 in a bullish flag pattern that occurs when a stock moves sideways after a rally. Tim Collins, technician from The Street.com, thought the stock was taking a breather, and predicted if it reached $608, it could go to $625. Google did break $608 to close at $612 on Tuesday. The relative strength index shows that there is momentum behind this move.
One problem Google has faced 3 times so far this year are bearish flags that cause a decline after a run. However, this is unlikely to happen a fourth time, because the TRIX, or the triple exponential moving average, is predicting a bullish crossover that will counteract the bearish flag. If Google closes over $608 by the end of the month, and with the support of stochastics showing a move off of support, Google could go as high as $750 sometime next year. Tim Collins thinks Google has the best chart in tech, and Cramer says the fundamentals support such a move, with success in advertising, the Android and its dominance in cloud, social media and mobile. Cramer would play Google with deep in the money call options out a few months.
Cramer took some calls:
MEMC Electronic Materials (WFR) missed its quarter and has not done well with changes at the top. A major cause of the problem is the company's exposure to solar, which is not a good place to be.
Caterpillar (NYSE:CAT), Oracle (NYSE:ORCL), Honeywell (NYSE:HON), IBM (NYSE:IBM), PPG Industries (NYSE:PPG), Vodafone (NASDAQ:VOD), Direxion Russell 1000 Financials Bearish 3x ETF (NYSEARCA:FAZ), Cheniere Energy (NYSEMKT:LNG), Eaton (NYSE:ETN)
The market just doesn't make sense, and is contradicting itself. What is down should be up and what is up should be down. Cramer discussed 6 market contradictions that occurred in a single session:
1. If Europe is so weak, why is Brent Crude at $115? It sounds like speculation gone awry.
2. How could the euro be stabilizing with Greece falling and Italy as the next nation to tumble?
3. European bank stocks are going higher, while the banks themselves are burdened with sovereign debt.
4. Gold prices declined on the resignation of Italian Prime Minister Berlusconi, when they should have rallied.
5. Copper has stabilized in spite of the weakness in the Chinese economy.
6. American companies, like Eaton (ETN), Honeywell (HON), Caterpillar (CAT) and Oracle (ORCL) are reporting strength in Europe. While IBM (IBM) and PPG Industries (PPG) has some negativity in Europe, these were only slight. Vodafone (VOD), which is wholly levered to Europe, reported a fantastic quarter.
How to explain these six apparent contradictions? Hedge funds are making huge contrarian bets, and these bets are so big they distort the actual market. Volatile action in the S&P 500 and in oil drillers makes the action seem artificial. The pools of money hedge fund managers are using are so huge that things are happening that are not supposed to happen. Cramer would be cautious in such an environment and fall back on high-yielding stocks.
Cramer took some calls:
Cramer would stay away from Direxion Russell 1000 Financials Bearish 3X ETF (FAZ) and prefers to make individual bets against individual banks.
Cheniere (LNG) is the most likely beneficiary if President Obama, who does not seem to be supportive of natural gas, is re-elected, and companies will need to export natural gas that can't be used domestically. Cramer thinks the stock could double by 2015 in this scenario, but warned that the company needs to raise more money in the shorter term.
CEO Interview: Peter McCausland, Airgas (NYSE:ARG). Other stocks mentioned: Deere (NYSE:DE), Air Products (NYSE:APD)
It's time for a victory lap for Airgas (ARG). The company fended off a takeover bid from Air Products Partners (APD) because ARG believed that APD's offer was less than the value of the company. Now that ARG has been hitting $70 consistently, it has proven that the valuation was right. This producer of packaged gases beat earnings by 1 cent and reported a 10% increase in same store sales, because it was able to pass on higher commodity prices to customers. APD, however, gave downside guidance and lackluster earnings--sweet revenge for ARG. CEO Peter McCausland said the strength in same store sales was because "American manufacturing is experiencing a renaissance." Heavy equipment makers like Deere (DE) are going strong, and the company has been making huge sales in its safety products.
"You stayed the course," Cramer said, "and you were right."
Jim Cramer was up 31% in 2009. Click here now to trade alongside him.
Get Cramer's Picks by email - it's free and takes only a few seconds to sign up.