Don’t feel bad if you’re having trouble figuring out this market, Jim Cramer told his Mad Money viewers Tuesday. Even the pros are baffled by the market’s recent moves. All you really need to know is that we’re not at the bottom yet, which means all we can do is sit and wait.
Why is the market turning into a giant land of confusion? It’s because many of the things investors are worried about are hard to comprehend. We all hear about supply-chain disruptions, but what does that really mean? In many cases, it doesn’t have anything to do with moving goods from one place to another, but rather the fact that companies were caught off guard by rising demand and simply didn’t order enough products.
Over on Action Alerts PLUS, Chris Versace and Bob Lang say, “pain points make for excellent investment opportunities.” They’re taking about semiconductors. Chips for the automotive industry, chips for data center expansion. That’s why they’re trimming Wells Fargo (WFC) – Get Wells Fargo & Company Report and UPS (UPS) – Get United Parcel Service, Inc. Class B Report, and starting a position in Applied Materials AMAT. Check out their latest trading strategies and investment ideas with a free trial of Action Alerts PLUS.
We’re also worried about the trucker shortage, but in reality, that should be called a “we don’t want to pay more” crisis. Transportation companies need to pay more or face the alternative, Cramer said, and the alternative is going out of business.
With so many crosscurrents, it’s impossible to know what to buy or sell. Last week, we were told the cloud stocks were the worst place to be with inflation on the rise. Today, the cloud stocks rallied, with Workday (WDAY) – Get Workday, Inc. (WDAY) Report up 1.3%. The semiconductor stocks should be minting money given the shortages we’re seeing, but both Micron Technology (MU) – Get Micron Technology, Inc. (MU) Report and Texas Instruments (TXN) – Get Texas Instruments Incorporated Report fell on weaker outlooks because they can’t make enough chips.
With all of these seemingly random, themeless moves, there’s only one thing you can do, Cramer concluded: wait it out.
Executive Decision: CrowdStrike
In his first “Executive Decision” segment, Cramer spoke with George Kurtz, co-founder, president and CEO of CrowdStrike (CRWD) – Get CrowdStrike Holdings, Inc. Class A Report, the cybersecurity company that’s in the middle of its Fal.Con 2021 user conference.
Kurtz explained today’s announcement of CrowdStrike’s extended detection and response network, known as their XDR coalition. He said the system allows multiple security providers and partners to share data points to help strengthen all of their products. The system utilizes advanced analytics and automated workflows to stop breaches even faster.
Every company, big and small, needs to protect itself from cyber threats and ransomware attacks, Kurtz added. The XDR platform will help even the smallest companies respond to threats like the big boys.
Ransomware in particular is a huge challenge, Kurts said. The average ransom payout is now $6 million and if companies don’t pay it, data will be leaked on the Internet where it will be equally costly to clean up.
Off the Charts
In the “Off The Charts” segment, Cramer checked in with colleague and commodities expert Carley Garner over the direction of oil prices and what it might mean for the stock market.
Garner first looked at the Baker Hughes high count, noting that last week, the U.S. had 433 oil rigs in operation. That’s up from the lows set in August 2020 of just 172. Rig use has steadily risen since those lows, however it is not rising quickly enough to meet demand and it pales in comparison to the pre-pandemic highs over 800.
Garner next looked at West Texas crude prices, noting the seasonal patten over the past 30 years suggests a top typically forms right now and continues until almost the end of the year, meaning the current rally may be living on borrowed time.
Gartered added that before the shale drilling revolution, $77 to $84 a barrel used to be the floor for oil prices. But since the revolution, that floor has become the ceiling. That leaves the next floors of support at $72 and $62, leaving little to stop crude below those levels. She advised using caution, as the market would be shocked if prices fell that far.
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