Cramer's Mad Money - How Low Can Oil Go? (10/14/14)

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Includes: CLR, DPZ, JNJ, LNG, MACK, NXPI, SWKS
by: Miriam Metzinger

Summary

According to technical analyst Carley Garner, oil may find support at $77.

Cramer discusses the issue of how close we are to a market bottom.

Continental Resources CEO Harold Hamm, despite recent oil declines, is optimistic.

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday October 14.

Off the Charts: How Low Can Oil Go?

Cramer consulted the technical analysis of Carley Garner to determine how much further oil can fall. Earlier in the year, Garner predicted a decline in oil prices. Looking at the chart of the West Texas Crude price and that of the Commitment of Traders [COT], there was reason to believe that oil would go higher in June. However, with the unexpected events, such as increasing tensions with Russia, Isis in the Middle East, and Ebola, oil has fallen. Cramer thinks $77 is oil's floor of support.

Is This a Bottom? Stocks discussed: Skyworks Solutions (NASDAQ:SWKS), NXP Semiconductors (NASDAQ:NXPI), Merrimack Pharmaceuticals (NASDAQ:MACK), Johnson & Johnson (NYSE:JNJ)

"Yes we can bounce after a decline...but can it last?" asked Cramer. The Dow declined 6 points on Tuesday. It was another day when the averages looked great but the gains couldn't be sustained. Cramer outlined on Monday what was needed to create a bottom. So what went right? Europe doesn't show signs of hope, but Skyworks (SWKS) pre-reported a strong quarter, and this was good for semiconductors. Citigroup (NYSE:C) reported an upside surprise; "Citi has gone from worst to first." There was actually no bad news about Ebola, but Cramer thinks this might just be a pause. Industrials rallied at the beginning of trading on lower oil. However, Cramer thinks there can't be any sustainable rally without strength in commodities. Interest rates fell, which might have caused some selling. Johnson & Johnson (JNJ) reported a strong quarter, but the company is facing margin pressure and competition. "You are not going to get an investable bottom in this market, but perhaps maybe just a trading bottom," said Cramer.

Cramer took some calls:

NXP Semiconductors (NXPI) has gone all the way up and has come back down, but since this is a tough market, Cramer recommends caution.

Merrimack (MACK) is in a good place for a drug company, but is speculative.

CEO Interview: Patrick Doyle, Domino's Pizza (NYSE:DPZ)

Domino's Pizza (DPZ) reported a great quarter, and Cramer has been behind the company for years. He thinks that it is a "tech restaurant company." The stock rallied to 11.3% higher, reported a 2 cent earnings beat, with revenues rising 10% yoy. Its same store sales rallied 7.7% rise in same store sales domestically and 7.1% SSS rise abroad. "We are really happy with where we are," said CEO Patrick Doyle. Voice app is going to be the way orders are going to be made, said Doyle, and the company is developing this technology. Many markets are already 60% digital with orders. DPZ has abundant cash, and Doyle says he is looking at ways to return capital to shareholders. Cheese prices have been a headwind, but Doyle sees costs decreasing. Doyle is confident about consumer confidence, and low prices in gasoline is a benefit for DPZ. Cramer would buy DPZ on any decline.

CEO Interview: Harold Hamm, Continental Resources (NYSE:CLR)

Continental Resources was climbing on the domestic oil renaissance, but with the fall of oil prices, it has seen a monstrous 34% decline. There are concerns it will have to cut back on its drilling. Harold Hamm said the trend is not over, but it is slowing for now. The company has a new well, but the news got lost in the recent pessimism over oil. Cramer asked CEO Harold Hamm if $60 oil is possible. Hamm denied this possibility and thinks oil will be back to $90, "before you know it."

CEO Interview: Charif Souki, Cheniere Energy (NYSEMKT:LNG)

Cheniere Energy (LNG), like other energy stocks has been punished recently. CEO Charif Souki sees oil declining dramatically, at least for the short term. This is not good news for natural gas, as it makes the fuel, which is usually cheaper, less in demand, but Souki says LNG will be sustained by long-term contracts with clients. Souki says the situation with oil prices won't be improved unless the U.S. permits the export of oil. Otherwise, overproduction may drive the price down.

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