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Pattern recognition is the name of the game in this business. It allows you to make investing decisions that have some grounding in history. But what happens when the patterns go out of whack?
Then what do you do? Well, you got a day like today when the Dow advanced 91 points, the S&P gained 0.66%, and the NASDAQ jumped 1.05% to a record close, all occurring with a backdrop that should not have generated such strong performance.
Yes, today was bizarre because we're conditioned to believe that interest rates go down when oil goes down, and stocks are supposed to be captive to the bond market, not the oil market. We've seen this pattern since the war broke out at the end of February. You could bank on it. I mean, literally bank on it. Banks were the chief losers when oil went up and interest rates soared along with it. But not today.
Like so many other groups, the banking pattern went for a ride, too. As oil went lower, rates continued their relentless climb, with the 30-year yield up a few basis points, putting the all-important rate at 5.66% — and that's way too close to comfort for 6%, right? I mean, it feels like the 30-year is headed to 6%. So, there goes the S&P, traveling north all day.
NASDAQ got a tremendous session. It was led by Microsoft with better-than-expected numbers from Copilot, and Meta, with the revaluation of this one-time pure advertising company — something embraced by small business owners who can't get enough Muse. And there's Nvidia, which is finally getting its due from that last amazing quarter. It hit another all-time high today. So much for the people who said "trade it, don't own it." In short, the patterns broke today. Oil and interest rates moved in opposite directions. This time, it was oil that controlled the stock market by going lower.
What the heck's going on here? Have the old decoupled? Usually, no. But we haven't had usual time since this president was elected. So, here's what we have to do: we have to pull things apart, figure the situation out, so we can make our next moves. Let's start by tackling the price of oil. Now, this price has been reacting to the amount of oil that can get through the Strait of Hormuz. We know the amount of oil coming through this crucial vein had declined from 18 million barrels a day to around a couple million barrels at its nadir. No hard and fast numbers here available for anything. Now, though, it's about back to 80% of its pre-war levels. Now that is a gigantic comeback.
We learned this weekend that the Saudis are discounting their oil by $5 below the standard Oman Dubai benchmark. Quizzical, because oil's in such short supply — what are they cutting price for? But you know what? I think they're just defending their market share, and perhaps making China a happier customer than they might have been with Iran.
But that's enough to shave a percent or two off the price of West Texas Intermediate crude. There's no way oil can stay so high if the Saudis are selling at a discount. But let's be clear about it. This is what's going on: the price of oil is going down because producers keep lowering prices to take market share — not because the Iran war premium has gone away. For oil to trade on its fundamentals, which, by the way, would be a lot lower, the war would have to end.
As usual, I'm not optimistic about the possibility of peace in the Middle East. The White House just sent a whole additional carrier group of about 7,000 sailors to the region, along with an amphibious marine group of 2,000 soldiers. Doesn't exactly scream "give peace a chance." Historically, you don't just send the Marines unless you intend to use them. But history hasn't meant all that much in this era. And as long as we're at war, I don't see oil getting too far away from what I call the pinned price of $100, which has somehow become the war price for quite a chunk of time now.
All right. So then let's examine the bond market. That's misleading, too. Sure, there are tons of Paramount Skydance bonds flying around — $52 billion of what I would call untenable paper, meaning those who really need yield are reaching mightily for it with this company. Some of these bonds are trading at 9%. Now, that doesn't mean bargain — it means red flag to me, because you're assuming a lot of risk to chase that yield. I never chase yield, but there are always people who think it's worthwhile to do so. I cannot protect them from themselves.
We also learned that Treasury Secretary Besson basically copped to not being able to stop a bond market slide with his meager multi-billion-dollar bond buys. He apparently bought something like $5 billion and change of bonds. He's plugging the dike with a finger, and there's $31 trillion in treasuries behind it. I don't know what possessed him to say that he had better information than everyone else. That was kind of sad — other than maybe that's something like the president might say. What matters is that the bond sell-off only accelerated when Besson admitted defeat.
The incredible thing about the bond market is that the last data point we have — the soft non-farm labor report from last Friday — was supposed to be hugely important. The weakness wave should have lasted a week, maybe even two. Instead, it didn't even last a day. Now, that could be because we've got more inflationary statistics coming. I'm not so sure. It might be because we know that the US government has gigantic funding needs. Or maybe big hedge funds are shorting bonds. Yes, you can do that, because the trend is your friend, and the relentless decline in bond prices tells you that somebody's making fortunes shorting them. So others are probably joining them. If even a soft employment number can't push bond prices up and yields down, then the short side is the path of least resistance.
Which leaves me with stocks. Now here I think there's tremendous distortion caused by some very big winners, namely Nvidia, Microsoft, and Meta. The rally in Nvidia has a lot to do with the fact that if you buy the latest and greatest chips, you make a lot of money doing so. That's something that Jensen Huang always told us would be the case. And that's why Elon Musk's SpaceX, I think, is really going higher. Starting in December, it'll be making more than $3 billion a month, maybe as much as $4 billion. The numbers aren't all public, simply for lending other companies its computing power. Now, there's a business for you. Elon runs an Nvidia house for SpaceX, meaning that his giant server farms run on Nvidia, and they are worth a lot to any company in the AI game.
Microsoft — now, more on this one later — but it's all about the surge in Copilot use. Meta: that's all about Muse, and how it's beginning to have an impact with small business, a much less fickle customer than the current customer book of business, which is the consumer. These three are big enough to actually send the NASDAQ higher. But when you take them out of the equation, the classic safety stocks — so many of them in there — they all got hit today, which is supposed to happen given the action of the bond market. At least something was consistent.
So we put it all together and we have a real one-off day. Oil's down, but only because of a momentary excess of supply. Rates are up because demand for money is high, and Treasury Secretary Besson turned out not to have any cards up his sleeve, or otherwise. I sometimes wonder if he was a good bond trader back in the day.
And stocks: as usual, a handful of hyperscalers are pushing up the NASDAQ, and acolytes are along for the ride. Can a day be a one-off, meaning no pattern worth discerning? Oddly, in this market, I think you can dismiss a day, as there are mitigating factors everywhere. That said, I wouldn't be too complacent.
The bottom line: we have so many stocks, with so many companies, that can't rally until interest rates reach a level where selling bonds is just plain stupid. The only conclusion: the bond sellers so far have been anything but stupid. My money's on them to tell us when and where we're going next. Bonds, not oil, are telling the truth — at least longer term. Always bank on the bond market longer term, even if we are in the throes of oil gyrations at this very moment. Let's go to Joe in Illinois, please. Joe,
Hi Jim. This is Joe from Chicago, where the Bears will be in the Super Bowl, the Sox in the World Series, and the Wildcats will be in the top 25. But, you know,
I'm not going to disagree. I always like — I function on the concept of hope, at least in the last six days. Tell me more.
Okay. Anyway, Jim, I'm not a cowboy, but I've been riding this — this isn't my first rodeo. I've been riding the bulls with you for the last 25 years, and you've helped me tremendously, Jim. Thank you.
You're a great teacher. Thank you.
Thank you. But anyway, my question is: when do you invest in a stock and when do you trade a stock? For example, I know you've taught us to keep stocks like Nvidia and Apple. And then my question now is with Honeywell Aerospace — it's been in a trading range. I've made some money over the last few days, but now it seems to be stuck at around 153. And I know you soured on the stock a little bit when it first came out, right? So, what do you think? Is it something that—
The company has no credibility in my eyes. None whatsoever. You know, if it were a sports team and someone said that, we'd all be nodding our heads and saying, "Yeah, no credibility here." You're never supposed to say that about a company. You're supposed to say, "Who is Cramer to even say that?" I've been a businessman all my life, and a business person, and a successful one, and I don't like anything I've seen from these guys. They have no credibility, and I have the right to say it because I have credibility. Let's go to Sammy in California, please. Sammy,
Hey. Hi Jim. And you do have credibility. And I want to tell you I think you're a trip, and your staff and your office crew—
Well, I got to call them as I see them. When I make something wrong, I'm out there saying, "You know what? I bought this and I made a mistake." I wish CEOs would do that. Then I wouldn't have to say they have no credibility. I would say at least they owned it. And that's all you can ask. I'm sorry, Sammy, I didn't mean to interrupt, but sometimes it just makes me so angry to think that people can say whatever they want once they become CEOs. You can't. Not in this room.
Agree. And they run rampant ragged over half the country. So anyway, I'm glad you speak up for the rest of us.
Thank you, Sammy. You know, of course, they make a ton of money for no reason whatsoever.
You have helped me make a ton of money. So, I want to tell you that.
Um, I wanted to talk to you about a stock. I bought it when it split. It's a semiconductor stock, and it started at 125 this year. It rose to a fabulous 301, and of course I didn't sell it. And during the momentum craze it dropped to 190. It's bouncing around 206. Apparently its valuation is pretty high at 53, and according to what I read — I'm not a brainiac with this — its revenue grew 14%, below the 17% it would need for the price to improve. So, what catalyst will cause the stock, KLA, to rise, and where do you see it going in the coming year?
Okay. I think KLA — look, I like — just, you know, I like Lam. Okay. I mean, I like Applied Materials and KLA, but they're all really good companies, and they are the solution for the huge semiconductor shortage we have, of which KLA is certainly part of that, of being able to make things better. I would own that stock right here. Again, I like LRCX more, and I like AMAT more, but that's a very, very good company, and I would not sell it. Definitely not. Let's go to Francis — and thanks for the kind comments. I sometimes get a little heated because there's some companies where really some changes need to be made. Let's go to Francis in Florida, please. Francis,
Hello Jim, good evening. Um, I have a two-part question for you about Domino's Pizza. I've owned it a long time. It's one of my largest positions. It's been very good to me through the years, both with dividends and with a steady share price increase. But the last three, four years it's wavered, and I'm wondering if you think it's just kind of gotten off the superhighway — it's in a rest area — or do you think it still has a lot of road to go, especially with international expansion, and that it will get better with time?
You know, this is a very tough one. And what I'm going to do — I usually don't like to punt like this — but they're about to report, and they have a new CEO. And I just think when you have a new CEO and you're about to report, that's a fraught moment to be able to make a stand on a stock. Let's see how the new CEO handles himself. Let's see how the company does, and then we'll be able to make a better, more informed decision on DPZ, which was one of my biggest wins for a very long time. That was during the period when Pat Doyle ran it. He did a fantastic job.
All right. When it comes to direction of stocks, my money is on the bond market to tell us what to do. And right now, the sellers are in charge there. On Mad Money tonight: HPE, which I don't talk about enough, is finally breaking out. Is there even more room to run? Don't miss my deep dive on this one. Then, gold prices change with the seasons — so where are we in the cycle right now? I'm going off the charts to see if you should stay long on the precious metal. And Planet Labs stock has been plummeting to earth lately. Could it be the start of a buying opportunity? Do not miss my tech take. And stay with Cramer.
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After years of suboptimal performance, HPE, or Hewlett Packard Enterprise, finally seems to be living up to its potential, thanks to the AI infrastructure boom. This stock is up almost 185% year to date. Pretty serious outperformance. You know what? I think it's got more room to run. This is a company that primarily makes servers, data storage, and networking equipment, along with hybrid cloud services. As the massive investments in data centers started to ramp a couple of years ago, the promise of HPE was obvious. They were one of a small handful of companies, like Dell and Super Micro, that make the kind of advanced servers that can handle the highest-end AI processors, like the ones made by Nvidia.
These servers are how most enterprises actually get their hands on that technology, not right from the semiconductor company. Two years ago, I recommended HPE precisely for that data center exposure, because the company seemed like it was getting its house pretty much in order under CEO Antonio Neri. HPE was in the low 20s back then, and with the stock now in the high 60s, that was obviously a great time to buy.
The truth is, for most of 2024 and basically all of 2025, this thing was indeed dead money. By last year, I know I was getting frustrated. Their acquisition of Juniper Networks took much longer than expected. The stock was stuck in the high teens. They reported some soft quarters, and the tariff hurt them pretty badly. I liked that Elliott Management was in there — quite possibly the smartest activist investment firm — and they'd taken a pretty big position in the spring of last year. But by June of last year, I told you, "You know what? Enough." I'd rather just own Dell, which has proven itself the better operator of the two.
Since then, Dell is up 390% and HP is up 283%. So it was the right call, but I never needed to abandon HP, especially when Nvidia's Jensen Huang had dragged me over to meet Antonio at GTC nearly — that's his big conference, Nvidia's big conference — two years ago, and then again earlier this year just to show me their exhibition booth. It was pretty darn impressive. Look, I still prefer Dell, but HP has finally broken out of its funk and then some.
How did this happen? How did the stock get its mojo back? I mean, for starters, my original thesis in HP was correct. Data centers desperately need advanced servers that can handle high-end GPUs from the likes of Nvidia and AMD. There are only really three players of scale here, and one of them, Super Micro, is in hot water because people associated with the company allegedly helped Chinese customers evade AI hardware export bans. Hmm. That means HP is now the clear number two in the space behind Dell. And given the tremendous growth here, that's a pretty good place to be.
Second, this year the company has finally started putting up some truly great numbers. HP's core cloud and AI division, which houses the server business, has grown at a mid-20% clip for the past couple of quarters, thanks to over 30% revenue growth from server sales. Now, double-digit growth from storage products, too. Now, when the company was struggling in 2024 and 2025, they kept having trouble with their margins. While HP was seeing improved growth from AI, it was also spending heavily, which meant the new AI business was less profitable than it could have been.
But over the past few quarters, that's really improved. HP's operating margin bottomed out at roughly 8% in the second quarter of fiscal 2025 — meaning the quarter that ended in April 2025. It rose to the low double digits by last October and has climbed in each quarter of fiscal 2026. Their operating margin hit 12.7% in the first quarter, 13.3% in the second quarter, then jumped to 16.2% when they reported a month ago. Wall Street was only looking for 14%.
Now, basically what's happened here is that their operating margin doubled in about a year and a half. That's the percentage of revenue left over after cost of goods sold and operating expenses. Listen, you double your operating margin, you're going to see a monster earnings boost. Sure enough, HP has raised its full-year earnings forecast every time it's reported this year.
When HPE introduced their 2026 guidance last December, they were talking $2.25 to $2.45 of earnings per share. When they reported a month ago, the forecast had risen to $3.75 to $3.85 per share. Not many companies have that kind of progression. HP also raised the sales outlook at each of the past two quarters, and last month they rolled out a very strong outlook for the 2027 fiscal year.
Management says to expect earnings of $4.40 to $4.60 per share. Wall Street was only looking for $4.80. That's quite an impressive beat. Then there's the final piece of the puzzle, which is that HPE is finally getting credit for its networking business. This used to be a small piece of the pie, but then they decided to acquire Juniper Networks in early 2024. Juniper's a heavy hitter in networking. Unfortunately, in January 2025, the Justice Department sued to block the deal.
For a time, this seemed like the only merger that the Trump administration was against, but they were really pursuing it pretty aggressively. Eventually, though, in June of last year, they reached a pretty benign settlement, and finally closed on Juniper last July. Ever since, their networking division has been putting out fantastic numbers — that was a good acquisition after all.
Last week, HP hosted a networking investor day event, wholly dedicated to explaining the scale of the networking opportunity that's been created by the great data center buildout. Management says they expect their networking division to see its revenue rise at a high-teens compound annual growth rate through fiscal 2029, with operating margins in the mid-20s to high-20s for the next three years. Many, many companies would kill for that.
In response, a bunch of different analysts started raising their price targets for HP, to the point where I felt compelled to circle back to the story and tell you about it, only to help you understand how a company got its groove back and why this stock has been so strong.
Now, for a long time, HP was one of those ideas that looked great in theory, because we knew they were going to be a big winner in the great AI buildout, but it just didn't seem to work in reality. The company struggled with profitability, and the Juniper Networks deal took way too long to close. But now everything's fallen into place, and HP keeps putting up surprisingly strong numbers.
So let me give you the bottom line on this very exciting story. Still, I am not ready to say that I like HP more than Dell, because Dell's best of breed. But Dell trades at 18 times earnings; HP only trades at less than 15 times next year's numbers, which is much lower than it should be versus its growth rate. So sure, even if it's not as good as Dell, the stock acts a lot cheaper, given the lower valuation. I think HP's got more upside here. Again, not my absolute favorite, but it is terrific to see that co-CEO Antonio Neri's got his house in order, and the company's putting up some excellent performance that I think can continue for some time. HPE is back after the break.
Coming up: are we about to see a golden opportunity for a bounce back in gold? Cramer's digging into the charts to find out, next.
The last eight months have been pretty darn brutal for the price of gold. After a spectacular run in 2024 and 2025, the precious metal peaked at nearly $5,600 an ounce near the end of January. Since then, it's come down to around $4,100. Now, normally you'd expect gold to be a winner during a period of persistent inflation. It sure did anticipate the inflationary flare-up, but it had run up so dramatically coming into this year that perhaps it was just due for a serious pullback.
But don't say you weren't warned. Back at the end of January, right around the peak, we checked in with our resident commodities expert, Carly Garner. She's a brilliant technician who's senior commodity market strategist and broker at Carly Trading, as well as being the author of the Tarly perspective newsletter. She told us the precious metal markets were broken, and gold seemed ready to peak or at least give us a sanity-saving correction. In other words, she nailed the top. Since then, Garner's been bearish on gold, but now she thinks something's changed, and she thinks there's a high probability of a relief rally. What makes her more sanguine?
Okay. According to More Research Center, Inc., MRCI for short, which is a seasonal trading service, going long December gold futures around September 29 through October 25 has been a profitable trade in 12 of the last 15 years. Obviously, that's not a guarantee, but this has been a very strong seasonal pattern. Garner points out that autumn tends to be a good time to own gold, thanks to the Indian festival and wedding season and China's Golden Week celebration — lots of demand from those. Just take a look at the seasonal pattern of the annual action in gold prices, which mimics that of the last 15 years. You can see right here that it has a strong tendency to rally from late September through late October. Of course, it also tends to be temporary.
Then gold typically finds its footing again near the end of December before rallying hard in the first few months of next year. What makes this more compelling, though, is what's been holding the price of gold down. Normally, when we have higher inflation, investors like to park their money in gold because it's a hard asset that retains its value even when your currency's purchasing power is diminishing by the day. But when oil prices soar and that pushes up Treasury yields, that puts pressure on gold the same way it puts pressure on so many other things. So to get a real turn in this precious metal, we need oil to keep cooling off. And that's exactly what Garner is predicting. Take a look at the chart. This is the daily chart of West Texas Intermediate crude. Lately, oil's pulled back from its highs in the triple digits, coming down to $89 a barrel today. Garner reminds us that oil's had a pretty dramatic sell-off from May through July, back when President Trump and the Iranians seemed like they were willing to give peace a chance. That happened right after oil touched the upper trend line in this chart.
When that happened again last month, we got yet another pullback from the highs. Garner's betting that we can see a similar decline this time. Doesn't hurt that our government and the rest of the G7 have opened the strategic petroleum reserves to flood the market with crude. As Garner sees it, once oil breaks down below $89, then the chart suggests to her that it could head back to the bottom of the channel. We're about $75 a barrel.
Nice hit. I don't know if we'll get any foreign policy moves that can justify that kind of decline, but man, there's an election in a month. And it wouldn't surprise me if the White House does everything in its power to get oil lower before America votes. And if oil comes down, that's likely to send Treasury yields lower, too. Remember, higher oil has consistently pushed rates higher. It's not crazy to think that lower oil will provide us some rate relief. And when rates come down, well, that's good news for gold. Check out this very short-term chart with the price of the 10-year Treasury note in green versus the price of gold in yellow. It's kind of a cool chart, isn't it? Every tick represents just two hours of trading. Garner points out that over the last 30 sessions, gold and the 10-year have settled in the same direction 94% of the time. And you can see that from this chart, they've practically been trading lockstep. So, anything that can push Treasury prices higher, which sends yields lower, should also benefit gold prices. Finally, how about the daily chart of the October gold futures? This is not a popular futures contract. It's not very liquid. Most traders skip from the August futures to the December futures. But Garner points out that gold futures tend to spike in the direction of the dominant trend going into the first notice day, the day futures traders need to get out of their long positions if they don't want to take physical delivery of the actual gold. In this case, that day happened to be September 30th. This time the October gold futures dropped $170.
You can see here we go in a single session going into the first notice day, but then the price held above the floor of support. At the same time, it hit oversold levels in the RSI index, which you can see down here. That's an important momentum indicator to go under that looks like a short-term bottom. As long as gold holds near 4,150, she expects it to rebound to 4,500, maybe to a high as 4,650. That's a lot in the not-too-distant future. 4,500 represents a downtrend resistance line. 4,650 is where the 200-day moving average currently sits. Talking about a move up to here would certainly be worth getting. Remember, Garner is not a believer in the longer term. She wouldn't expect gold to meaningfully exceed these levels, but that would still represent a terrific rally. I'd like you to catch that. Here's the bottom line. The charts interpreted by Carly Garner suggest that we've got a high-probability setup for a strong bounce in gold this month, making this a good time to go long. I think she makes a pretty darn compelling case. Let's take calls. Let's start with Don in Indiana. Don.
Hello. How are we doing today?
I am doing well, Don. How are you doing?
