Stocks discussed in the in-depth session of Jim Cramer’s Mad Money TV program, Friday May 30. Click on a stock ticker for more analysis.
Toll Brothers (NYSE:TOL), Hovanian Enterprises (NYSE:HOV), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Merrill Lynch (MER), Lehman Brothers (LEH), American International Group (NYSE:AIG), Washington Mutual (NYSE:WM), Wachovia (NASDAQ:WB), Bank of America (NYSE:BAC)
Cramer told viewers that a return by the banks could happen next week which could set off a market-wide rally and take us all a lot higher. It all depends on two important factors, Cramer said: housing and unemployment. Falling home values and weak employment numbers have killed the banks. Earnings from Toll Brothers and Hovnanian Enterprises early next week and Friday's job report could change that. If these two homebuilders show at least some stabilization, the mortgage-backed securities could also regain pricing strength, and they have been at the center of the credit crisis.
The possibility for a bottom in housing should result in a bottom for banks. Cramer said that would take a lot of pressure off companies like Citigroup, Wells Fargo, Merrill Lynch and Lehman Brothers. A decent jobs number will just add to the good news, taking the banks, and the rest of the market, even higher. If oil drops to a decent level and the usual end-of-month buying takes place, it will be all the better for investors.
Cramer said poor numbers from homebuilders and a bad jobs report would be horrible for financials. American International Group, Washington Mutual, Wachovia and Bank of America could drop to new multiyear lows if this were to happen. But Cramer said he feels positive about the outcome overall. Investors should not do anything until Friday. If the stars align as Cramer expects, you have your green light. If not, stay conservative.
[Editor’s Note: The remainder of Cramer’s Mad Money program on Friday was a re-broadcastof a previous show.]
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