Transcripts For CNBC Mad Money 20130821

The right price and you can make shareholders a fortune. You get it wrong, and it is a killer. The house of pain. As we found out today, the day where the dow slipped eight points. Most people dont think that execution matters that much. They dont believe someone can come in at the top and make the kind of changes that can save a company or get it out of the celt cellular cellar and into a competitive position. When a new coach takes over an nfl team, he can rapidly create miracles. Someone that decides best buy can never come back no matter who runs it might also be a total believer in the possibility of a quick turn, say, in the San Francisco 49ers organization whether jim harbaugh takes over after 6 in 10 season. Sure enough, harbaugh takes the same team to the playoffs with a 133 record and next year, the 49ers, theyre in the super bowl. We dont think anything of that, right . Thats the way it works, coaching matters. Im quite confident that chip kelly can turn around the philadelphia eagles. The playoffs, well, lets see. But why not . Isnt that how it works . You fire the coach, bring in a new coach and get the big turn. Yell when an herb jolie takes over best buy a little over a year ago, we didnt give it a second thought. Theyre finished. When he loses the first couple of games of the season, the stock drops, its clear hes a joke and he should be fired but its a long season. And a year later, you have a stock thats now traded to 34. 84, up 4. 06 or 13. 2 today alone after reporting a quarter that shocked most analysts who didnt think he could deliver such high growth margins so soon. Plus jolie made it a terrific competitive place online. Does anyone doubt the viability now . And ive got to tell you something, the nfc championship, it could be knocking. Can it go further . Funny thing about turn arounds, turn arounds maintain their own momentum. Theres plenty more to be done. And if you go through the release, youll see theres many more things he admit need to be done. When richard hain took back the ceo job at Urban Outfitters a few years ago, people thought the company couldnt recover. Like a good nfl coach, he knows he has to rebuild the team, hain made no promises up front. Now a year and a half later, shareholders have a double with the stock up 3. 27, they are 8. 91 , alone, one session, hain made the turn by building up 38 samestore sales gains. I dont think ive ever seen that big of a gain yearoveryear. And splurge anthropology came up 9 comps, urban outfitterers came in at 9 , they were not happy with that, with you it did give urban a 9 yerz overall comp gain, which is spectacular. The call last night was a magnificent one filled with congratulations here and there, and recognition in a short period of time, hain, the cofounder had taken one of the great retailers and reignited the business. Not unlike what Howard Schultz accomplished when he came back to starbucks after it too had been derailed. I think this Urban Outfitters trajectory is taking off because urban has mastered the direct to consumer, its built an excellent Customer Relations management, crm, and has capitalized on the turn in housing with anthropologys beautiful housewares line plus whatever else my daughter bought there for 200 last weekend. The companys wholesaling to the big dogs like nordstroms and huge margins taking them all by storm. It has to do with an experience that has made the division into something much bigger than a store. Its not just some store merchandising a product. You know what it is, it reminded me listening to the call. Its daughter of lulu lemon, a cherished brand. Lets get to jc penney. Few executives withering fire when he came in to clean up the mess of ron johnson, the fired former ceo. Looked to be a terminal situation with Comparable Store sales at one point down almost 30 , thats a tailspin that almost no one can break. But break it he has. And you saw that when the Company Reported today. Now, some nitpickers looked at the decline, wrong focus, people. Ullmans bringing back old customers with the promotions penneys known for and hes fixing the Housewares Division bringing pricing back to where pen penneys shoppers can afford the goods. Theres a ton more that has to be done, ullman said that, he admitted it. But also said that back to School Season was strong. And he indicated the company had ample liquidity. Thats all you really needed to know. Penneys will make it through the holiday season. Something it was in doubt a couple of months ago and i think the turn, it is at hand. The only thing lacking here, an apology from Hedge Fund Activist Bill Ackman who directly questioned ullmans ability, even as the guy was giving it all she got and actually succeeded. I believe the stock closed at 14. 01 because ackman wants out. Though thats still about an 8 gain, that gain was fourth best for the session. Ackman and ron johnson, they did almost wreck the company. The house of pain. Something that wouldve wiped out about more than 100,000 jobs. Bill, heres your hat, whats your hurry . And dont let the revolving door hit you on the way out. Finally, theres home depot. I didnt save the best for last because despite the 10 increase in sales home depot didnt rally because it didnt make as much as it should have and while the forecast was raised, i wasnt raised enough to please everyone. I say give me a break. I want in, not out of this stock because the ceo took over in 2007 is giving you 85 gain despite the fact most of that accomplished during a housing crisis. The fact that home depot didnt rally today doesnt deter me from saying this is one of those kind of a like what have you done for me lately. If blake won the super bowl last year and its awfully hard to give you a repeat. Lets put the achievements of best buys jolie, ullman and home depot blake in perspective. We heard from nordstroms and saks, from macys and the working middle class with walmart, and they were all disappointing, all of them. What did we hear . We heard about the weather, the consumer worries, gas, taxes, i didnt hear any of that talk today from these companies. These executives didnt need alibis. They made the playoffs. Heres the bottom line, the the person at top matters, the person that can turn an enterprise around, we celebrate the successes of the football coaches, even belichick, perhaps we should do the same thing with the head coaches at Urban Outfitters, home depot, best buy and j. C. Penneys. They let you wager and then they make us money. Plus, unlike the nfl, these gentlemen actually let you share in their success. They let you wager on their performance legally and then they make us money. Simply because were along for the ride as shareholders. I say lets give them a hand. Nate in ohio. Nate . Caller how you doing, jim . Whats up, partner . Caller not a whole lot. Just a quick question. Tsx, im pretty much a brand new investor about six months ago i bought dsx and then after a little while, just i didnt like what i was seeing with it. Recently, im liking what im seeing. What are you thinking . I said its for real. I said the turns for real in diana. I think world trade is picking up. Mayers reported good numbers last week. I think dianas move is for real. Lets go to most dont believe that, by the way. Lets go to john in florida, please. John . Caller hey, how you doing, jim . Not bad, john. How are you doing . Caller oh, pretty good. Thanks for everything you do. Thank you. Caller thank you for taking my call. Jim, im calling about a stock ive been tracking for a long time. Ive been watching the Insider Trading on it and ive accumulated a multitude of the january 14 five and seven calls, and the stock is opko health and just listed on the Tel Aviv Exchange and its taking off. And its got all of these new products coming up in the pipeline. I just need your advice on. Well, people know that opko is one of my absolute favorite specs. Weve had dr. Frost on and hes making us a lot of money now. And when i say us, i mean you. It will not matter it listed in israel at all. What does matter is they continue to get the milestones, continue to break new ground with their drugs, phil frost is for real, so are you if you bought the stock. Like a boss, yes, strong leaders can save sinking ships, but its saving sinking ships that i actually care now, one last thing, jc penney, i heard a lot of smack talk about penney, ive been smacking it for years now. Im done with that game. Mad money will be right back. Coming up clash of the casinos. The house doesnt always win. Tonight, it could be your turn. Its a highstakes casino battle royale. That includes some serious weve beef between the big guys. Cramers checking the odds to find out which stocks to hold and which ones to fold. And later, beer here. Cookouts with cramer heating things up all week. Finding this markets hottest themes and youve got an allaccess pass to this picnic. Tonight, grab a cold one and get ready for a beer battle that crowns the top hop purveyor. Plus, storm warning . Clouds have been forming on the horizon as the market pulls back from its alltime high. Tonight, cramer charts out if were headed for a rebound or if things could be getting ugly. Dont miss this edition of off the charts. All coming up on mad money. Dont miss a second of mad money. Follow jimcramer on twitter. Have a question . Tweet cramer madtweets. Send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc. Miss something . Head to madmoney. Cnbc. Com. [ male announcer ] its time. Time to have new experiences with a familiar keyboard. To update our status without opening an app. To have all our messages in one place. To browse. And share. Faster than ever. Its time to do everything better than before. The new blackberry q10. Its time. A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . Sometimes the stock market can feel like an ultimate fighting championship, mixed martial arts battle royale. Duelling analysts, membership managers, but tonight i want to talk about the ultimate stock market brawl. Genuine las vegas style ceo smackdown you know, this is something you dont see very often. Ceos rarely come off their perch to take a swing at each other. Thats exactly whats been happening in the casino industry. Back at the end of july on the Las Vegas Sands Conference Call, this was unbelievable, totally jawdropping. The companys fabs fab fabulously rich ceo Sheldon Edelson had unkind words. He used the Conference Call to blame Caesars Entertainment and mgm resorts for driving down Hotel Room Rates along the Las Vegas Strip thus diminishing Las Vegas Sands earnings. This guy is such a hitter he said there are two companies that own about 20something odd properties just off the strip and they are controlling the room rates. Caesars and mgm, both of which have significant debt and they dont have a big way to pay them off. Caesars has 22 billion, 24 billion and i guess their income barely pays their debt service. So maybe it exceeds it. What a quote. And get this, he went on to say, so they are trying to fill up all their rooms to get more bodies in to play the slots and play in the casinos. And the only way to get them is to buy the business by reducing the price. And that brings down my friend steve winns and higherend properties where they are undercutting us by large amounts. And he finishes, this is amazing, he goes, the sucking sound that we hear is the room pricing and trying to fill up their properties so they can do something to help pay off their excessive debt. They dont have the Business Model we do to sell off noncore assets and pay down all our debt. Whoa, man. It cant be. Thats quite a statement. In my opinion, maybe a little gratuitous given Las Vegas Sands only gets about 8 of the business from vegas to begin with. But apparently he hates price competition as much as we do on mad money. It could have ended there. One ceo complaining the price cutting tactics are ruining things for the industry. What happened in vegas kind of stays in vegas, but apparently the chairman and ceo of mgm resorts and a cracker jack former wall street analyst took exception to his comments. In an interview muir entired back and i quote we know the market here. We in ceasars are the largest players, we provide the most jobs, most tax revenues and the most community support. Its obvious to us the market is Getting Better. And then he continued saying edelson is, quote, entitled to his own opinion. Maybe since hes rich he thinks people care about what he has to say. Its obvious we know las vegas better than he does. Ouch. So whos in the right . And much more importantly, which one should we own . It needs to be noted that whatever mgm and caesars are doing it seems to be working. Las vegas sands is up only 23 , about the same performance of the other highend player wynn resorts. Does that mean hes being a sore loser . I dont think so. The difference in performance comes down to the fact these are very different shaped animals. Jim muiren was right when he pointed out that both mgm and ceasars are much more focused than lvs vague. Vegas. Lvs, thats not the bread and butter, its mgm and caesars. The company gets about half the business from china, another 39 from singapore. The reason mgm and caesars have been leaving lvs in the dust is las vegas is mounting a major comeback that you may not know about while the chinese economy is stuck in a rut, until very recently. Lets stipulate both mgm and ceasars know the market better. Lets go with muren. Even so, he has a point about how the hideous Balance Sheet is forcing companies to offer rooms at cut rates in order to cover their debt service payments. Caesars is on shaky ground and even with the terrific recovery, the company has so much debt, its hard to imagine them turning a profit. As long as caesars doesnt go out and out bankrupt, the vegas market should do just fine. Where i then edelson went wrong was lumping mgm into the same category as ceasars as if theyre all just playing cards on the table. The fact is, mgm is making Real Progress paying down their debt. And the company should be able to break even this year and actually turn a profit in 2014. No more roulette. When mgm reported two weeks ago, the company beat numbers for the Third Straight quarter thanks to a 2. 5 increase per available room and thats a key and important metric in this lodging industry and 100 incremental margins at the Las Vegas Strip properties. It is true that mgm rates are lower acrossed board. But lvs and wynn only have highend properties while mgm has a mix of diverse properties. Like the bellagio where i like to stay as well as some that are less fancy. And maybe theres more demand for a cheaper experience. Because mgms occupancy rate is at 95 , higher than lvss 91. 6 and higher than wynns. 8 86. 9 occupancy rate in vegas. A higher occupancy rate, it matters, great for business. Mgm for every dollar a guest spends in the room, they spend three bucks elsewhere in the casino. Of course they want to pack as many as possible, that makes a ton of sense. They should be comping them, but mgm isnt just thriving because the prices are lower, the truth is, las vegas is in a monster comeback mode. And mgm resorts is basically an etf. There, you like that . Its an etf. Mgm has been making serious investments to boost revenues. As well as 100 million outdoor retail and dining Entertainment Complex to capture traffic along the strip. What do you want . What do you do . What do you buy . If you want to play the resurgence of vegas, i say buy or stick with mgm, which is giving you a 48 gain since i recommended it last december. On the other hand, if you believe like i do that chinas turning, then its easier to imagine the best of breed wynn resorts roaring higher. Heres the bottom line. When it comes to the smackdown between Las Vegas Sands and mgm, im calling it a draw. And i welcome one or both to step into the mad money ring for a rematch. These companies are simply playing on two different things. You want exposure to vegas . Mgm, you want to play the rapidly expanding market in asia, Las Vegas Sands or wynn. But theyre two different kinds of companies. Ive got to go to ben in new jersey. Ben . Caller hey, jim. University of miami booyah. I was wondering how you feel about Norwegian Cruise Line nclh. I think it turned out to be best of breed. I didnt see that coming. I thought carnival was, but it had a bit of a problem. Norwegian is a good company. I think youre okay being there. All right, they say that the house always wins, but what do you do when the houses battle against each other . This time, you know what im doing . Im calling it im calling it a draw. After the break, ill try to make you more money. Coming up beer here cookouts with cramer, heating things up all week finding this markets hottest themes. And youve got an allaccess pass to this picnic. Tonight, grab a cold one and get ready for a beer battle that crowns the top hop purveyor. Anncr expedia is giving away a trip every day. Where would you go . Woman greece. woman 2 i want to go to bora bora. man id always like to go to china. anncr download the expedia app and your next trip could be on us. Expedia, find yours. Labor day just a couple of weeks away. Were firing up the barbecue because its cookout week here on mad money. And you know what, this cookout really couldnt have come at a better time. With the market feeling like its ready to take a bit of a breather, you might want to sidle up to more defensive stocks. Perhaps in the spirit of what liquor can do for you, theyre blotto. Last night, i told you about the Healthy Organic Food ill be grilling up. You cant have a barbecue with nothing more than just tofu and soy milk. The key ingredient to any cookout is brewskis. And looking like weve got a burgeoning red hot bull market in the beer stocks. According to nielsen, the first four weeks ending on the 3rd, beer sales were up 3. 8 . Thats a huge acceleration from the 1. 8 increase in the previous four weeks. Whats going on . Just consider both Anheuser Busch and bud, the largest brewer, okay, and boston brew, boston beer which is sam. Symbol as in sam adams, reported back on july 31st. What happened . Boston beer delivered a fabulous, honest to goodness beat, which is in keeping with what youd expect since the craft names have been on fire. And im not just talking about one of my favorite craft beers. Schrader brow. This is a delicious brewed beer from breaking bad. This stuff is dynamite. Craft beers like sam adams have been sweeping the country. And you can see that in boston beers earnings report. This company delivered 1. 45 of earnings per share, the revenues came in higher than expected rising 22. 9 yearoveryear, thats a big number. Shipments were up 22 . The company gave upside guidance for the full year in response in perhaps the greatest single move weve had in an earnings period, shot up from 178 to 204, thats a 14. 6 move in a single days trading. I could shake this and pop it and it wouldnt go up as much as 14. 6. And im going to do that later on. But not the schrader brow. Thats what i mean when i say weve got a serious bull market in beer. I dont think boston beer is the way to play it. And not just because i personally prefer a bud light to the fancy beer. Ipa. Go get me a bud, a cement head. Honestly, i dont know many people who consider sam adams fancy. The stocks up 53 yeartodate, its trading 34 times next years earnings like a biotech. That kind of multiple might be okay if this companys growing like a run away train, but boston beer is only expected to grow by about 15 next year, the longterm growth rate is just 10 . The valuation here is extremely stretched. Its teslalike. Even though i think the trip is coming. At these levels, i have to urge you to ring the register. Theres a price too high to pay for even the best of breed brewer. Its clear its become popular. There are tons of these beer brands popping up everywhere. Some flying fish 6 point or whatever. And boston beer needs to compete with them too. Okay. So if not boston beer, then who . Well, anheuserbusch reported on the same day. And while the company didnt blow away the numbers, bud actually missed the streets earnings estimates. In a way it did something more impressive. Anheuserbusch, the Company Behind budweiser, and becks along with numerous other small brands reported a mixed quarter. Yet the stock roared higher anyway. Bud delivered a 12 cent earnings miss off of 1. 05 basis. Thats not so hot, right . But at the same time, the companys revenues came in higher than expected with 3. 9 organic growth. And what happened . Stock popped. It jumped from just under 90 to 95. 71. The day it reported. And then it climbed another couple points to 97. 94 the day after. Ultimately rallied. Why did bud catch fire on what many people would consider a miss, a bad number . Some of it has to do with the volume is surprising people. Volumes is up with of the key metrics in beer. Bud has been raising prices. It seems the price hikes havent done much to hurt demand. Meanwhile, bud posted the first positive margin improvement in five quarters. How many times have i told you . Gross margins matter. Clearly upside in the future. The stock has rallied more than 10 yeartodate. Its got room to play catchup. Bud has a ton of catalyst. In june, bud closed on the 20 billion acquisition of the big mexican beer company you probably known as corona. Or modelo. This is an amazing stat. My staff put it together. Mexico is the fifth Largest Consumer of beer on earth even though its only the 11th largest country by population. A terrific area to be in. The synergies should drive some nice Earnings Growth for bud going forward. Sometimes i get the real big one, i always feel like, put that one in a paper bag there. On top of that, lets not forget that anheuserbusch is a global company. Major exposure to europe, china, latin america. You know i think europe and china are turning, one of the reasons why the euro is so strong for europe term. As for latin america, buds business has been held back by the weakness in brazil. I know brazils troubled, but i dont think that weakness is going to last. The world cup comes to brazil in 2014 followed by the olympics in 2016. I think youre going to believe those are going to be pretty darn good for beer sales. Bud sells for 17. 4 times next years earnings estimates, gets fair priced considering all the good things going this companys way. Although, of course, obviously like everybody else, like it on a pullback. Heres one. This is what the crowd drinks in summit, molson coors, tap, i see it similar to bud but with Less International exposure and a stock run up further. Specifically 18 yeartodate. Thats why im saying that bud has more room to run because its well behind this one. And certainly well behind this one, although, this one is an up and comer. Suppose you want something stronger than beer, though, then the pick is very easy. I want you in diagio. Its been one of my favorites for a long time. Deo, thats the Huge International spirit play you know as Johnny Walker green, Johnny Walker red, black, whatever. As well as bond favorite smirnoff. Plus kettle one j b and captain morgan among many others including a solid beer business too made up of guinness, which i find makes a delicious and nutritious breakfast and i actually have a pouring degree from guinness when i went to dublin. Diagio is up 8 for the year, held back by emerging markets countries. Burr oning burgeoning markets make up 40 of the business while europe is 22 , big business in india. India doing bad. Again, if you believe as i do that the rest of the world or r. O. W. Is starting to rebound including europe, diagio will be a terrific catchup play. Weve got a tremendous market going in beer. Its just extraordinary, okay. Its time to ring the register, i think, in some boston beer and its time to stock up on some bud. And if you need something with a lot more kick, then i suggest you go with my buddy, pal, friend Johnny Walker and diagio. Lets go to brooke in york. Brooke . Caller hello, jim. Thank you for taking my call. My pleasure. Caller i noticed that the wendys stock has been on the rise. I heard that wendys is selling over 500 companyowned stores to franchisees. I thought a little extra tlc from new owners sound like a recipe for growth. Jim, what do you think . I like wendys. Now, ive been waiting for a pullback. Thats one of the things, everyones obviously waiting for a pullback. They have a burger. This pretzel bacon burger that moved the needle. Typically, we dont see a new product really move the needle. They are theyve got great salads, theyve got wraps, this this new burger. Theyve got the momentum. I think the stock is breaking out of here. Ive been waiting for the pullback to feature on our show. I think you have horse sense go to frank in north carolina, please. Frank. Caller hello, jim. Thanks for taking my call. Not a problem. Caller listen, calling about sodastream. I own in that stock and i see it had a pretty good pop today. Im looking to buy more but definitely not at these levels. And im wondering what you would suggest as far as a pullback or a dip. Right. In the way of price. Well, i was speaking with Herb Greenberg the other day and we were saying you know, now theyre in walmart whats left. Were looking for a brand new place for them to put their machines in. I think theyre well covered. I do not see a catalyst for that one to go up. I do not think it is a buy here. And if it goes down, itll be because somebodys sales slipped. I am going to put a dont buy, dont buy on sodastream. I did like it for a long time. I do not condone drinking while running, but this beer market is buzzing for sure. And ive got to tell you something, im going with the cement heads, im going with bud. Dont move, the lightning round is next. Every day were working to be an Even Better Company and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger.  youre not made of money, so dont overpay for boat insurance. Geico, see how much you could save. Every day were working to and to keep our commitments. And weve made a big commitment to america. Bp supports nearly 250,000 jobs here. Through all of our energy operations, we invest more in the u. S. Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Lightning round is sponsored by td ameritrade. It is time it is time for the lightning round on cramers mad money. Are you ready . Start with josh in virginia. Josh. Josh in virginia. Josh . Caller jim, a big booyah from bristol, virginia. Sweet. Caller yeah. I had a question about my favorite stock right now which is micron. I doubled up on my position at the end of july when it dropped 10 . Right. Caller my question is, should i feel comfortable with having almost 20 of my portfolio in micron . No, thats too high. Like the stock because i like the merger they did with the japanese dram company, but no, you cant do that. Because tech is kind of shaky between now and the beginning of october. So be very careful. Maybe trim some back and buy it lower. Rob in california, rob . Caller all right. How are you doing . Real good, partner, how about you . Caller good. What are your thoughts on renren. Hey, sunshine, thats that chinese stock. Were not buying those. Those are all killing people. Jerry in tennessee . Caller big old, thank you very much elvis memphis booyah for ya. Talking about vodafone, largest telecommunication company. Now youre talking, this is the kind of stock i like. I want european exposure, highquality company. I want you to buy this stock. I need to go to larry in massachusetts. Larry . Caller greetings, jim, from your number one cramaniac. In the Massachusetts Bay colony. How are you doing tonight . Boston looked okay. The yankees are getting hot. Whats up . Caller well, having been a mets fan in the 60s, i can only emphasize and recommend wait until next year. Doris kearns goodwins book. My professor when i was up there. Caller oh yeah, she was terrific. Great adviser of mine. Caller gotya. Let me keep going on lightning. With epzm having taken a 14 shellacking, no news no, there was no news. But remember, this is a very speculative stock, its a binary stock, could be good or bad. I remember, a treatment of cancer, i think speculative. I do like the company, but understand, its had a big, big move. A big move. Lets go to anthony in tennessee. Anthony . Booyah, mr. Cramer. Booyah, anthony. This is from tennessee. Ive been there. A diamond mine i went through there. Caller we know you love kroger, but how much . I love it to the tune of 45, my friend, i like it. And that, ladies and gentlemen, is the conclusion of the lightning round. The lightning round is sponsored by td ameritrade. 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And tonight were going off the charts with the help of Dan Fitzpatrick, my colleague at realmoney. Com at the street, to see if the technicals can give us a definitive answer. And ive got to tell you, youre not going to like what the charts interpreted by fitzpatrick have to say if youre a long stock. But you need to listen, anyway, because its always important to know the other side of the trade. Fitzpatrick thinks the s p 500 has indeed peaked and it will be range bound at best, trading sideways, for the rest of the year. I know its not the answer you wanted, but might be the one you need to hear. Why does fitz think its done going higher . At least for 2013 . Take a look at the s p 500s daily chart. See this diagonal line . This is the uptrend, uptrend resistance line, okay, thats defined the top of the trading range ever since the recent rally began last november. Its what fitzpatrick calls the ceiling. For six months the s p made a series of higher highs that kept testing the ceiling. They kept hitting it. For the 50day moving average, a shorter term measure of the trajectory acted as a powerful floor for support, the red is the 15day. Every time it hit that it bounced again like a trampoline from january through june. Every time the s p pulled back, the 50day average saved it. Fitzpatrick points out this pattern created a series of fabulous buy opportunities, but the pattern ended definitively on thursday, june 20th, when the s p broke down decisively, decisively below its 50day moving average. This was the first time in 2013 the benchmark index actually made a lower low. Look at this. You can see this was very, very different from everything else, right . Look at this, it always held. For fitzpatrick, this breakdown below the 50day moving average was a shot across the bow from 9 stock from the stock market, the first big warning sign that the trend was in trouble. Managed to come back, albeit briefly. Rallying to a new high earlier this month, heres the thing about the comeback fitz doesnt like. Unlike all of the other new highs in 2013, this latest one came nowhere near where the ceiling was. It came nowhere near testing the ceiling of resistance, unlike this, this, this every time it tested, not this time. If the s p cant keep touching or coming close to that resistance on each rally, it tells fitzpatrick the uptrend might indeed be over. And the s p 500 tested the 50day moving average and it failed that test. S p is once again broken down below this key moving average and fitzpatrick thinks this is disheartening for the bulls. Another powerful sign that the rally may have come to an end, at least for now. Check out the moving average, the macd, the macd at the bottom of the chart. This is a trend and momentum indicator. Weve talked a lot last week. Technicians like the macd because it helps them detect changes in the securities trajectory. And lately hes seen two things to make him feel cautious if not nauseous. The indicators made up of two lines, the macd, thats green, and that simply measures the distance between the underlying securities 12day moving average and 26 26day moving average. When its trending higher, it reflects upward momentum in the stock and commodity in question, in this case the s p 500, and when its trending lower, reflects downward momentum. Then theres the second line known as the signal line and thats in purple. Thats just a nineday moving average of the first line. Now, when the macd crosses below the signal line thats known as a bearish crossover and it usually precedes a selloff. We saw this in late may june. See this, there was a bearish cross in the macd indicator. I hope you can see that green line going through the purple line, okay . And not long after that the s p 500 had declined, pretty badly, okay. Why does this matter to fitzpatrick . Because on july 30th, we got another bearish crossover. That was just three days before the s p peaked at 1710, since then had a 3. 3 decline and fitzpatrick believes things could get a lot worse, not worse, a lot worse. How much worse . Well, if the s p 500 cant break back above the 50day moving average, thats going to become a new ceiling of resistance. In other words, its going to go like that. And thats right around 1,660, its all s p. And fitz thinks the s p could fall far enough to test the new floor support, the longer term 200day moving average currently at 1,550. Holy cow. Even if the s p holds above the 200day moving average, the upward momentum will be exhausted and stuck in a trading range for the rest of the year. Thats the bull case. Thats the bull case. Why is this happening . All right. Youre going to see. Take a gander at this chart of the s p 500 plotted in red against the tnx, something ive talked about before, thats the yield, not the price, but the yield on the tenyear u. S. Treasuries, which is in black here. Fitzpatrick points out the tnx twice rallied, in other words, Interest Rates go higher before pulling back. First in early july, okay, and then, again, in august. Got it . Both times treasury yields peaked at that level and the s p was able to continue its climb. That changed when it broke out last thursday. You can see that. Bingo, okay . And fitzpatrick circled that on the chart to signal how significant that is. Treasury yields and at the same time the s p 500 broke down through the floor support that had been holding it. Fitzpatrick thinks the breakout is a hugely negative development for the bonds and stock market. As you can see from this chart, bond yields didnt correlate that strongly with the stock market. Sure there was a moment in june where it got crushed but then the s p quickly rebounded from that. It was a passing thought. But fitzpatrick thinks the relationship has changed with the latest development. Bond yields clearly do matter to the stock market and if the tnx keeps rising, fitz believes the s p will continue to struggle. Mean while there are a host of largecap stocks fitzpatrick thinks are simply broken. Everything from Home Builders to ibm, cocacola, walmart, disney, at t and verizon. Heres the bottom line, the charts, at least as interpreted by Dan Fitzpatrick say the s p 500 has peaked for the year. Me, i say many of the inputs reverse for example, if Interest Rates come back down a tad, which i think is entirely possible because i dont see that much economic demand in this country, then much of this work that hes focused on will be undone and we can still go higher. But then again, maybe im just a Glass Half Full kind of guy and dan looks at the same glass and sees it as half empty. But with europe turning and china Getting Better while the u. S. Keeps percolating, i am not ready to write off any further advances. However, i recognize if Interest Rates jump from these levels, then the glass wont be half empty, it could be spilling all over the floor. Stay with cramer. If you have high cholesterol, heres some information that may be worth looking into. In a Clinical Trial versus lipitor, crestor got more highrisk patients bad cholesterol to a goal of under 100. Getting to goal is important, especially if you have high cholesterol plus any of these risk factors because you could be at increased risk for plaque buildup in your arteries over time. And thats why when diet and exercise alone arent enough to lower cholesterol i prescribe crestor. [ female announcer ] crestor is not right for everyone. Like people with Liver Disease or women who are nursing, pregnant or may become pregnant. Tell your doctor about other medicines youre taking. Call your doctor right away if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. These could be signs of rare but serious side effects. Is your cholesterol at goal . Ask your doctor about crestor. [ female announcer ] if you cant afford your medication, astrazeneca may be able to help. When will tesla peak . At what point must we abandon amazon . Isnt netflix overdone on the upside . These are the questions i get constantly jimcramer on twitter. And i have to tell you pointblank these stocks will peak when the Companies Fail to execute on their game plans. Until then theyll remain cult stocks and theyll go up until they get destroyed by the management of companies themselves. All other attempts to call top are they dont care about valuation, they just care about the experience. Let me say from the outset that all three of these stocks are wildly overvalued on the basis of earnings. They make no sense at all. They are way out of control versus the rest of the market and divorced themselves from classic p e multiple analysis. The problem with that analysis, it could have been said 100 points ago for tesla. 200 points ago for netflix or amazon. The Valuation Case made by short sellers every day of the week while it doesnt mean a thing to the investors buying these stocks. Take today, this morning tesla received five stars from the national highway Traffic Safety administration. Thats the highest any car can get. This news came on top of the Consumer Reports which gave the car the highest rating. Now the vast majority of professionals couldnt give a darn about this stuff. They look at the market capitalization and scoff at how ridiculous a car company that makes about 20,000 odd cars could have that kind of valuation. They said that at 10 billion, 8 billion, 5 billion. They look at the price multiple and say this is a travesty. But its not a travesty to those who own the stock. Because they look at different metrics. What metrics are they using . I dont know, cool car per share . Safety per share . I know such analysis is painful for those who do homework, but its not always that rigorous. Take netflix, the exclusive pay tv home for content. So what, who cares . 2016, might not even be the numbers. The users of netflix says, wow, i can get everything with netflix. I love this service. I could buy the stock, the stock was up huge today. This morning i read an article about amazon. How its spending fortunes to build out its warehouse. Thats a negative with any other company stock. Not amazon. For amazon, its about dominance, having the ability to be able to deliver sameday food to your house. Of course, it went up again. All three of these news items, well, they make the cult case for ownership stronger not weaker. All three signify that management totally gets it. The people like netflix and buy the stock have another reason to buy the stock. The people that own tesla can own more shares because theyve got a safe car on their hands. Those who own shares of amazon could say look out supermarkets, look out walmart, you cant beat my stock. It is my stock to these shareholders. I recently test drove a tesla and i loved it. Zero to 85 in a nano second on interstate 88. Sorry, guys. And i heard nothing, it was so quiet. I thought house of cards on netflix was one of the greatest shows ive ever watched although i blanched at the orange is a new black because its kind of embarrassing to watch with a woman. Does that make me want to buy any of these stocks . No because im professional and thats not how it done. However, professionals are not ruled by every stock. Some are ruled by retail investors, some are ruled by amateurs and continue to undervalue the experience and have to cover their shorts in order to stay in business and that moves it still higher. As long as the experience is maintained or enhanced, these unsophisticated owners will keep on buying. Oh, and guess what, they have the added advantage of being right. Stick with cramer. [ agent smith ] ive Found Software that intrigues me. It appears its an agent of good. [ agent smith ] ge software connects patients to nurses to the right machines while dramatically reducing waiting time. [ telephone ringing ] now a waiting room is just a room. [ static warbles ] grrrrreat outdoors, and a great deal. Ahhh lets leave the deals to hotels. Com. Perfect yep, and no angry bears. Up to 30 off. Only at hotels. Com. I dont have to leave my desk and get up and go to the post office anymore. 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Than any other place in the world. In fact, weve invested over 55 billion here in the last five years making bp americas Largest Energy investor. Our commitment has never been stronger. Theres going to be a lot of fed talk over the next couple of days. You must watch the tlt. As it goes down, if it goes down, be very, very careful. But if it starts going up and Interest Rates go down, tenyear 2. 75, look out. The upside, theres always a bull market somewhere, i promise to try to find it, im jim cramer and ill see you tomorrow american greed. Marc dreier. Highpowered lawyer. You can smell the money, and thats why the clients come here. Narrator . Bon vivant. When marc stepped into a party, marc was there to party. Narrator . Con man. You have a guy whos actually pretending to be other people. Narrator he steals more than 700 million from hedge funds. They were vast pots of money with billions and millions, you know, overflowing the sides. Narrator . Because thats where the money is. 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