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: Stocks are off to a higher start after a small dip in the S & P 500 last week, but a major theme carried over: Once again, the Magnificent 7 stocks, excluding Nvidia , are powering the S & P 500 higher while market breadth (based on the number of advances to declines) remains poor. Although the average stock can’t seem to get going, we’re viewing this lackluster action with an opportunistic lens because the market ended last week oversold according to the S & P Oscillator. China and Starbucks : Some consumer stocks with strong China ties are taking a hit after another string of disappointing economic numbers. The country’s National Bureau of Statistics reported retail sales increased 3% in November, missing the forecast of 4.6% in a Reuters poll. We reduced the bulk of our exposure to the Chinese consumer after parting ways with Wynn Resorts , but we still own Starbucks. The weak retail numbers may have put a drag on shares of the coffee chain Monday, but we’d argue the company should be measured by CEO Brian Niccol’s ability to turn things around in the United States. That’s Starbucks’ most important market and Niccol’s number one area of focus. But back to China, we liked the news Monday that Starbucks hired its first-ever chief growth officer in China. Seems long overdue to us. But the question we still have: What’s Starbucks’ long-term strategy in China? Will management pursue strategic partnerships? Is a spin-off of the China franchise on the table? We don’t know these answers but we trust Niccol as an operator to do what’s best for the company. Chip stocks: Broadcom has officially gone parabolic. The stock is one of the biggest gainers in the market on Monday following its 24% surge last Friday. Last week’s rally pushed the semiconductor and software company’s market capitalization into the $1 trillion club. Even though the market is technically oversold — meaning we are more of a buyer than a seller — we would be selling 100 shares of Broadcom on Monday if we were not restricted. Not only has it gone up too far too fast, but its 32% move over the past two sessions has pushed its position size into one of the largest in the portfolio. Although we remain bullish on the long-term AI outlook CEO Hock Tan outlined last week on his earnings call , our discipline dictates it is time to ring the register and lock in gains on the stock’s terrific 115% move this year. We are downgrading our rating to a 2 . We would take a portion of the proceeds from the 100 share sale to pick up some Advanced Micro Devices shares into its ongoing weakness. AMD’s been hurt later by concerns that the hyperscalers will increasingly prefer custom AI chips from Broadcom and Marvell Tech instead of AMD GPUs as an alternative to Nvidia. This was the main bearish point in last Monday’s AMD downgrade to hold by analysts at Bank of America. The downgrade had some good points, but it did not give enough credit to CEO Lisa Su’s roadmap and the moves she’s made to boost AI engineering talent by acquiring ZT Systems. In addition, AMD shares are now trading at around $126, down about 10% from the low $140s just 10 days ago — a price that doesn’t fully appreciate its ongoing server market share gains against Intel. Up next: There are no major earnings Monday after the closing bell or Tuesday before the opening bell. On the data side Tuesday, we’ll get a read on holiday spending after the November retail sales report is published. (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.
Hock Tan, CEO of Broadcom.
Martin H. Simon | Bloomberg | Getty Images
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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