shares in this article
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• Inflation appears to have peaked
• Share prices can benefit from the situation on the market
• Signals point to a strong rally
The months of September and October are not exactly popular on the stock market – not even for Jim Cramer. While he doesn’t think investors will get away “scot-free,” as he puts it in the CNBC Investing Club, the lows are clearly in. Jim Cramer remains optimistic about the US stock market and expects the Dow Jones to end the year on a friendly note.
The chart signals point to a reversal
In recent weeks, the former hedge fund manager had pointed out that inflation had peaked, but that he still saw the economy on the verge of a recession. This suggests that even during times of economic downturn, share prices are being boosted. While some companies will fall victim to the recession, according to the Mad Money moderator, other companies’ share prices could also benefit significantly from the good news that inflation has been curbed and will appreciate significantly in this market environment.
The indications pointed to an oversold descent: Jim Cramer’s favorite index, the S&P Oscillator, however, after a few lows it was back at -7.92, a value that while still stands for an oversold signal, but also some scope for a strong one Rally display. What is astonishing about these signals, however, is that neither a forthcoming interest rate hike in the USA nor the new data on the consumer price index (for August) have had the expected negative impact.
Tech stocks in focus
The overvaluation of tech stocks remains even after the immense price losses. According to Jim Cramer, the FAANG shares, i.e. Meta (ex Facebook), Amazon, Apple Netflix and Alphabet (ex Google) are still overvalued even after the last price declines, due to their immense capitalization, their corporate structure and their continued leading role But big techs don’t fall as far as some predicted.
QUALCOMM and AMD would currently use the 19- and It’s trading at 10x earnings, making it worth buying and significantly cheaper compared to other industry giants like NVIDIA (40x earnings) – but Cramer also sees room for investment in the latter.
According to the CNBC moderator, a main problem is “lukewarm analysts” who are now gradually lowering price targets during the downturn, which they had gradually raised in the rising market. “It’s true that the market has no appetite for these stocks. Nor does it have an appetite for tech IPOs. That, as we know, is a positive sign. It’s often a harbinger of good things, like the tech rally of 2014 , which started when the IPO market closed. No more selling from Peter to buy Paul.”
The increasing number of share buybacks and insider purchases in the technology sector are positive. Because if China, the largest market in the world, comes back online, prices could rise significantly.
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