We’re buying 75 shares of Starbucks (SBUX) at roughly $83.59 each. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 600 shares of SBUX, increasing its weighting in the portfolio to 1.75% from 1.53%. We’re making one small buy Thursday afternoon — putting more of our large cash position to work into a market that is oversold, according to the S & P Oscillator, but not as oversold as we’d like to see to bigger buys. After Wednesday’s session, the S & P Oscillator moved to minus 6.98%. As a reminder, any time the Oscillator moves below minus 4%, it signals that the market is oversold, which means it could be due for a bounce. Whenever the Oscillator gets this low, we look for bargains and hold our nose and buy. We understand how painful it feels to keep buying stocks when the market looks this grim and continues to fall, but you cannot let your emotions get to you in a terrible market. Let’s not forget how painful it felt to make all those sales when the market was overbought but kept trading higher. It was tough to see prices continue to rise as we built up our cash position, but our discipline to the overbought Oscillator in August protected us against the nasty decline from the past couple of weeks. On Starbucks, It’s not typically our style to buy at a price so close to our most recent trade, which was Tuesday at about $83.45 . But Thursday’s trade still improves our average cost basis, and we still have plenty of room to build up this position. More importantly, we want to make sure we are putting some cash to work when the market is this oversold. It’s interesting to see Starbucks’ stock mostly shrug off one of Thursday’s big headlines of new Covid-related lockdowns in China. One reason for the SBUX’s recent resilience could be due to a data point that we’re closely monitoring: the decline in U.S. gasoline prices. That’s a positive for the Federal Reserve’s fight against inflation and also for consumer wallets and pocketbooks. AAA reported Thursday that the national average gas price is $3.829, which is down from $3.878 one week ago, and down from $4.212 one month ago. As pump prices fall, consumers will have more breathing room in their budgets to make discretionary purchases, such as making that trip to Starbucks to buy coffee and food. If we didn’t have trading restrictions, we would also be looking at a small buy of Amazon (AMZN). On Monday we upgraded our rating to a 1 , citing management’s recent focus on improving profitability, through initiatives like Prime price hikes and peak fulfillment charges, and easing inflationary pressures as reasons to get more opportunistic in the name. However, our restrictions never prevent us from telling members what we would do if we could. (Jim Cramer’s Charitable Trust is long SBUX and AMZN. See here for a full list of the stocks.) 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.
Source: Business - cnbc.com
