Mad Money w/ Jim Cramer 12/20/24
Mad Money w/ Jim Cramer
Deep Dive
Why did the market experience a sharp reversal today?
The market opened weak due to oversold conditions, but reversed sharply as the S&P Oscillator hit minus eight, signaling extreme negativity and a bullish bounce. The Dow gained 498 points, the S&P rose 1.09%, and the Nasdaq jumped 1.03%.
What is the S&P Oscillator and how does it help in trading?
The S&P Oscillator is a tool that measures buying or selling pressure. When it reaches minus five, it indicates oversold conditions, and buying should begin. At minus eight, it's a strong signal to buy aggressively, as the market is due for a bullish bounce.
What are the historical returns if you buy the S&P 500 after the Oscillator hits minus eight?
Buying the S&P 500 after the Oscillator hits minus eight has historically yielded an average gain of 2.88% within 30 days and 8.93% within 60 days over a 10-year period. The market was up 70% of the time after 30 days and 80% after 60 days.
Why did NVIDIA's stock perform well today despite recent pressure?
NVIDIA's stock opened deep in the red, which was a buying signal. The stock then ran sharply higher, closing strong, as it aligned with the strategy of buying during oversold conditions and down openings.
What role did the lack of a budget agreement in Congress play in today's market?
The lack of a budget agreement initially caused concern, but historically, government shutdowns have led to buying opportunities. The market often rebounds as the negativity is priced in ahead of the shutdown.
What is the significance of the personal consumption expenditure price index (PCE) data today?
The PCE, the Fed's favorite inflation gauge, showed a slowdown to 2.4% versus the expected 2.5%. This positive data point contributed to a short squeeze, as it aligned with the Fed's stance on inflation.
Why is CVS Health facing significant challenges?
CVS Health is struggling due to theft issues in its drugstores, competition from Amazon, and problems in its Aetna insurance business, including Medicare Advantage plan mismanagement. Additionally, a recent Justice Department lawsuit over opioid dispensing has added to its woes.
What is the Justice Department alleging against CVS in the opioid lawsuit?
The Justice Department claims CVS knowingly dispensed controlled substances in violation of the Controlled Substances Act, prioritizing profits over safety and knowingly filling invalid prescriptions. The complaint details cases of patients who died from overdoses linked to CVS's practices.
What is the current state of Agco's business and future prospects?
Agco is undergoing structural changes, aiming for 14-15% margins by mid-cycle, up from 6% historically. The company is investing in technology and gaining market share, positioning itself for growth once the agricultural cycle improves.
Why is Jim Cramer critical of day trading and zero-day options?
Cramer views day trading and zero-day options as akin to gambling, leading to mood swings, sleepless nights, and spiraling losses. He believes these practices are harmful and should be discouraged, with better warnings or restrictions in place.
- Market bottoms often occur when the S&P Oscillator goes below minus eight.
- Buying when the oscillator is below minus eight yields an average gain of 2.88% within 30 days and 8.93% within 60 days (over a 10-year period).
- The market is up 70% of the time 30 days after the oscillator hits minus eight, and 80% of the time 60 days after.
Shownotes Transcript