Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets : Wall Street’s comeback continued into this new week with the S & P 500 and Nasdaq on pace for their 8th straight session of gains. Although we like the market, we have one problem. It’s the S & P Oscillator , a technical tool that helps us figure out if the market is overbought and due for a rest, or oversold and positioned for the rally. The Oscillator has climbed higher with the market and could be very overbought if Monday’s gains hold at the close. Again, while we like the market, the Oscillator tells us it may not be the time to commit new money to stocks. The Oscillator overrides our views due to our discipline and tempers our near-term expectations. Case in point, the last time the market was overbought was July 11 after the S & P 500 closed at 5,584. While it went to finish at a record high of 5,667 on July 16, the index closed at a recent low of 5,186 on Aug. 5. The Oscillator got the late July into early August selloff spot on. On Monday, we got ahead of the Oscillator and exited Estee Lauder . We thought a flat reaction to horrible guidance was an opportunity to sell the rest of our position and raise cash. Profit-taking is important when the market is overbought, but so is taking losses. Like we said the last time the market was overbought —and also trimmed our Estee Lauder position — never sell your winners to subsidize your losers. Amazon : Morgan Stanley put out a good note detailing three different reasons why Amazon ‘s push into selling consumables and everyday essentials, like the items someone would typically pick up at a drugstore, is bullish for its long-term growth. We couldn’t agree more. Morgan Stanley also wrote about why Amazon needs a capital return program, especially now that mega-cap peers Meta Platforms and Alphabet , also Club names, started paying dividends on top of buybacks. We understand that Amazon’s management team probably has a tough time balancing investing and cash returns to shareholders – one-day shipping and sports rights don’t come cheap. But what caught our eye was a chart that estimated Amazon having the second highest percentage of projected net cash to total market cap of the top 25 S & P 500 companies, excluding financials. This data supports the argument that Amazon should have a defined capital allocation strategy, which would likely be well-received by investors. The highest on that list of 25 above Amazon is Club holding Salesforce, which does pay a quarterly dividend. Up Next: Cybersecurity leader Palo Alto Networks reports earnings after the close. Here are some questions we have ahead of earnings . Tuesday lacks market-moving economic data but some notable earnings reports are Lowe’s and Medtronic. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
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