Cramer's Mad Money - The Best Case Scenario For Stocks (6/5/12)

Includes: CAT, MAR, SGEN, WYN
by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday June 5.

The Best-Case Scenario for the Market. Stocks mentioned: Caterpillar (NYSE:CAT), Marriott (NYSE:MAR), Wyndham Worldwide (NYSE:WYN)

While many are focusing on the worst case scenario for the economy, Cramer decided to think about the best-case scenario for stocks on a day that ended the four day losing streak and saw the Dow rise 26 points. Germany should devise a plan to offer deposit insurance to banks, particularly to Spanish banks, but in euros. Currently, Spanish banks are in danger of collapse, and the situation is not helped by the fact that deposit insurance is in pesos. If such an agreement is made, and China comes to the aid of Europe (an action that would be in its interests, since 20% of China's exports are sold in Europe), a "virtuous cycle" might develop. Businesses in the U.S. would feel better about hiring, there may be a wave of acquisitions and mergers, U.S. banks would recover and companies may pre-announce a strong second half of the year. Cramer thinks stocks could gain 10% if the right action is taken in Europe. If not, there will be more down days.

Cramer took some calls:

Caterpillar (CAT) might not see further gains for the short-term, and Cramer would not be greedy, but would take some profits.

Marriott (MAR) is not as strong as a buy in the sector and Wyndham Worldwide (WYN).

Do The Charts Indicate a Rebound for the S&P 500?

The macro situation does not bode well for stocks, but the S&P 500 had a few decent days after a four day sell-off. Could stocks rebound or are they headed lower? Cramer discussed the analysis of technician Tim Collins of Collins correctly predicted a few weeks ago that if the VIX spiked, the S&P 500 would decline. He sees the charts as maintaining bullish patterns, but coming close to some bearish formations that indicate stocks could go either way. The S&P 500 has fallen below its 200 day moving average, and its daily chart shows a distressing cup and handle pattern, which is a reliably bearish sign. However, the S&P 500 has been holding its floor of support, and its 10 minute candlestick chart from Tuesday shows the S&P 500 bouncing between a floor of 1264 and a ceiling of 1280. The S&P 500 broke through the ceiling of 1280 to close Tuesday at 1285, and could move higher. The weekly chart shows that the cup and handle formation has not been completed yet, but it is in such heavily oversold territory, the index might not be able to bounce back so soon.

If the S&P 500 holds solid, it could make a comeback, but if it drops below key levels of 1260 or 1250, the index could end up in freefall.

CEO Interview: Clay Siegall, Seattle Genetics (NASDAQ:SGEN)

Seattle Genetics (SGEN) is a speculative biotech which develops "targeted therapy" to concentrate on killing tumors and sparing healthy cells. The company has treatments awaiting approval for lymphoma and prostrate cancer, and is applying its targeted therapy to deal with various cancers and different types of tumors. This type of treatment may increase survival rates and reduce side effects. SGEN is working with community doctors to adapt its 30-minute immersion treatment for use in smaller doctor's offices; this will reduce the need for inconvenient travel to specialty clinics. Cramer thinks SGEN is worth looking into as a speculative play.


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