nutty clusters and almonds. with 43% daily value of fiber for you. crunchy nutty clusters and real almond slices for your taste buds. i'm jim cramer. welcome to my world. you need to get in the game. firms are going to go out of business and he's nuts. they're nuts. they know nothing. i always like to say there's a bull market somewhere. "mad money," you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. just trying to save you a little money. my job is not just to entertain you but educate and teach. call me 1-800-743-cnbc. too strong or too weak? accelerating or declining? are things getting better or getting worse? that's the question. that's been on this market's mind every day lately. particularly today. dow dipped 64 points.

nasdaq gave up .21%. boy, it is hard to tell. but because it is so day-to-day, case by case, sector by sector, and really high profile companies are missing numbers, while others in the same cohort, same group, same sectors are skating through this moment, as if nothing negative's happening at all. today we have one of the biggest disappointments of the year, coach. the weakness was all domestic. the radical decline from 10% same-store sales for this handbag company to 1% and change. it took my breath away and a ton of points away, too. coach falling more than 11 points to $49. >> the house of pain. >> it remind me of the speech howard schultz gave on the starbucks conference call, the one who said it wasn't just his company who saw weaknesses but companies run by some of his friends. should have put two and two together and thought of coach. i didn't. it sure made sense schultz would have checked in with the ceo of coach.

lou is the best in the business, seen all kinds of ups and downs. schultz knows all the good boys. taking our cue from starbucks and coach may make a ton of sense. how do we explain the strength of whole foods? i mean, all three are expensive. all three can be traded down from. only whole foods seems to have withstood the high end onslaught and come through with flying colors. we heard whispers today coach might be, oh, this is that word you never want to hear, excuse. as word has it, the competitor hasn't seen this kind of slowdown, pleasantly surprised by their numbers. as surprised as we were to hear how well under armor, ralph lauren and pbh are holding up. unlike coach, these companies turned out fabulous numbers. not just here, in europe, too. let's not give starbucks a free pass. consider the case of dunkin' donuts. the market seemed unenthused

about dunkin'. this may be my bias. i have a belief a switch kbocou be occurring. maybe the fracturing means more of america runs on dunkin'. of course it's not just coach, not just starbucks. also tiffany that had a fall. weak june and july. chipotle told us the same thing in a disappointing conference call. let's get the mitigating factors at work again. you unlike may may not be a big fan of fautaco bell. meanwhile, panera, with a price point and reputation for healthy eating showed consistent earnings. i mean, the whole time, didn't skip a beat. oh, while we won't know until later this week how good or bad july was according to individual retailers, rt h, that i watch like a hawk, don't jump too far

off the consumer spending bandwagon, confirmed by the robust consumer confidence numbers we got today. best in five months. although of course the commerce department also released numbers showing household purchases are slowing to a one-year low. one hand or the other. kind of like this guy. how difficult is this on again/off again consumer? we're going to spend time later in the show reviewing chicos in an attempt to decide whether things are going gangbusters or falling off the cliff. the bipolar dichotomy is the relevant one going. armstrong world, big flooring ceiling tile company reported miserable quarter. terrible. talk about lousy construction spending across the board. masco said kitchen and bath fixtures slowed. armstrong and masco are european businesses. however, there's no denying if you felt worse about the housing boomlet, you felt worse about

the housing boomlet after you listened to these two companies. it made you queasy. i mean, i felt that way. until, of course, you considered every single home builder, i mean literally every one, standard pacific, d.l. horton, case-shiller index released today on "squawk on the street." got dated numbers admittedly from may but saw consistent albeit low level across the board home price improvement and usg said materials are stronger in the company, usg, sheetrock, registered trademark of usg company. combine that with lumber liquida liquidators, ll said last week when they talked about strong sales in housing with warehouser totally upbeat about the home boomlet, told me the housing recovery is gaining steam. you don't know who the heck to believe. strong domestic numbers from whirlpool last week, tool numbers from american side of stanley black and decker. they tell me, don't take your cue from masco and armstrong. maybe both of those two are

simply executing poorly. one look at the hgx, another closely followed indicator in forms of home building stocks makes you feel sanglan about this sector. it's case by case, it's unnerving, even for somebody like me who's followed these for years. of course, you hear we could be building 14. milli9 million car this country. obviously it's the foreign sales particularly in europe, in gm's case, china, ford's case, latin america, that are the culprits throwing us off the strong american scent. sometimes it's case within case. the beginning of the month cummins preannounced a -- for the whole trucking cycle. i know it made me less enthusiastic about one of the best bull markets out there. today came out with the earnings and they were okay. a heck of a lot stronger than you thought they'd been when the company preannounced. some was share take, some margin

improvement. cummins is somehow feeling better than a month ago which is why it rallied a boat load of points. ironically the confusion over the strength of the domestic consumer may be behind the stock market's resilience. let me get a number, for example, that shows the trends are going all starbucks or chipotle or coach on us, the money rotates. eli lilly, good quarter, at&t, good quarter, verizon, pretty good quarter. confirmation from whole foods or under armor. on soggy days like today we can wonder if the fed is going to take its cue from the downbeat numbers, like saying, whoa, coach, we better find some way to save it or we say things are so bad we should stick with at&t, verizon, and say the heck with the fed, rates are so low, that's crummy competition for our stocks. here's the bottom line. no matter what, one thing's for sure. the confusion is not resulting in wholesale selling in the

stock market. it's just resulting in rotation. a rotation from defensive stocks to offensive stocks and back. one that's like the action in olympic beach volleyball. vicious and jarring. ultimately, though, doesn't seem to kill us. but often quizzically seems to make the averages stronger. let's go to richard in ohio. please, richard? >> caller: hello, jim. adm. with earnings released today how do you rate adm for future dividends and growth. what effect will the drought in america have on an international corporation? and also in light of the circumstances, how do you feel about adm's leadership? >> man, i don't want to touch adm with a ten foot pole. once we had a ten foot pole on the show and it cracked my front tooth. i think it's a classic bad stock. >> sell, sell, sell. >> i never really liked the stock. only brief moments in time. i think it's a sell, sell, sell. i want to go to mike in florida. please, mike? >> caller: hi, jim. this is mike in tampa, florida. i need advice on electronic arts

ticker ea. i'm down about 30% so far. several analysts have price targets of 16 and higher. i did see that they just hired a new cfo. can i believe these targets? i am willing to wait if there's a future here. thank you. >> all right. sometimes this happens. electronic arts literally reported right before the show began. there's a conference call. i can't do to you at home what i advise you to do. i cannot opine on electronic arts until i listen to the conference call tonight instead of having dinner or watching olympics or having any fun at all. but listen, got to do the job. all right. rotate. all right? the market seems confused. some day it's this sector, other days it's that sector. in the end it's about knowing which to pick. and that's what i'm here for. you got to stick with the market. you got to stick with cramer. "mad money" will be right back. coming up, mind-numbing matrix. bond yields, qe iii and the ecb.

it's enough to make your head spin. tonight cramer's simplifying your screen and showing you what matters when he lays out his roadmap to make "mad money." and later, fashion face-off. one buy, one sell. it's a wall street showdown over a main street mall rat. could slipping into this stock make your portfolio more comfortable, or will buying here cause you to lose your shirt? plus, dry spell. drought conditions in the midwest have caused commodity prices to spike. and tonight, cramer's checking the technicals to make sure you don't bite off more than you can chew, when he goes "off the charts." all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a

call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. [ chirps ] ♪ [ chirping ] [ chirping ] ♪ [ chirping ] ♪ [ male announcer ] audi a4 drivers have spoken. [ engine revs ] and they ranked the a4 highest in total quality index in its class. [ chirps ] experience the summer of audi event and get exceptional values on the audi you've always wanted.

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you need a dashboard to see how well we're navigating this week. that's the gauntlet that is the federal reserve's pronouncement tomorrow, european central bank meeting on thursday where they'll allegedly reveal concrete plans to bail out the troubled bond markets and save europe and on friday the biggest obstacle of them on, the nonfarm payroll numbers of the labor department. fortunately, i have that dashboard for you. day or two ahead of time. first and fore midwest indicator i follow is gold. not only do i insist you own gold, follow the gld along with me. why gold? first it's been hard to gauge what gold is really measuring for some time, given the precious metal's performance over the last decade, performing better than any other class, you

can say gold -- the dollar has been both strong and weak. its rates have been high and have been low and we've had more relative peace than we've had inflation and deflation. gold isn't fickle, people. at given times it reacts to a given set of stimuli. right now i'm watching gold for the signals it's sending about europe. every single attempt by the europeans to solve their problems, by potentially putting money or borrowing money for sovereign bonds. it almost always goes up when the europeans are about to do something we would consider good meaning a pro-growth save or initiative that brings down italian, spanish bond yields and usually plummets right before the germans put the kibosh on anything that could go right. that makes sense. because right now gold certainly is a barometer for european inflation. last week, the day before european central bank chief mario droggi's pledge to euro, before and broke out of the trading range. that makes sense because they're

advocating an inflationary course of action. angela merkel, german chancellor, denied her own stance against bailing out countries. i like gold action today. if gold goes down tomorrow, let me tell you something, that's a signal the era of unity and good feelings in europe, it is off, which means i expect to get hit again. conversely, a rally in gold tomorrow would be a very good sign for all stocks worldwide. of course, because of the preeminence of europe the second indicator on my dashboard is the euro, itself. as measured by what's known as the fxe. put that symbol in. i want to see it hold above $119.70 level. that's the recent low. $2.6 o away from that right now. the same time the 130 level is where the euro plummeted from. any sign we might get back there would be hugely bullish for stock market. i honestly believe it could take us to all-time highs.

next up is the jjc. not just because those are my initials. the jjc is an etf that measures the strength of copper. i use it as the best judge of actual industrial strength worldwide. copper is used to build just about everything. too big a market to be manipulated. lately jjc has been bouncing between 42 and 45. it's terrific for the bulls. it's downright hellish for the bulls it's capped at 45. right now the jjc is a push indicator and could go either way. you know i love to look at the tra tro transports. people to freight. wow, did that ever give you a heads-up. it was before the huge swoon. it took a run at the heights back in february when h peit pe, swooned. it bothers me. i need to see the transports regain the july high before i can trust any real turn in the world's economies and particularly the united states'.

as far as i'm concerned is the rt8, the etf for the retailers. this is one of the most impressive sectors in the market and its refusal to roll over has kept me from becoming too bearish on this show. nothing measures consumer spending and consumer confidence better than the rgh. we have a dearth of bull markets out there. i like to hunt down the bull wherever it might be. i keep the hxb, home building etf front and center on my dash. this index is the most sensitive to the actions of the fed. so if you see it tick down ahead of the fed's meetings results tomorrow, i believe that could be setting up for a major disappointment and lack of action from ben bernanke which of course would be bad for the stock market. i also always keep one eye on the banks through the xlf. that's the banking etf. the index has been hanging in there. last week it started to make a break for the upside which i think signals people believe

something goodwill happen in europe and the fiscal cliff here in america might somehow be ave averted. tall order from one index. the banking group is incredibly sensitive to both washington and europe. i keep the oih, oil etf on my screen right now. candidly, it and its cousin have not been all that helpful lately. they tend to be gauging too much geopolitical risk to give you a useful read on europe, on washington or even actual industrial and consumer demand for oil and gas. in that case, gasoline. can't chuck them, though, because a real run in oil could derail anything. the greatness of all these indicators is their accessibility. any home gamer who wants to stay on top of developments and anticipate them can follow these indiceses themselves, chart them, stay focused on the key levels. may not be talked about all the time like the s&p 500 and the dow. they're forecasters more than simple tallies of results. that's what matters. prognostication. these should come second nature

to you, okay, as you try to win your way through a very, very complex and difficult market. here's the bottom line. you now have my markets dashboard which hopefully will give you a heads-up as we try to navigate the serpentine which is the federal reserve and the ecb. the indicatorors can be wrong. at times they have been wrong. together they kept me in the game and helped me do the same on the show for you. i'm no chartist. these are the charts i look at every day. almost hourly. they've been with me for years. they'll be my touch stones for many years to come and now they can be yours, too. after the break, i'll try to make you more money. coming up, fashion face-off. one buy, one sell. it's a wall street showdown over a main street mall rat. could slipping into this stock make your portfolio more comfortable? or will buying here cause you to lose your shirt? when the best of the best olympic athletes are playing for america in london, cramer never

stops playing for you. >> buy, buy, buy. >> as always, catch jim at 11:00 p.m. eastern on cnbc and during the olympics find "mad money" at 6:00 p.m. eastern on cnbc world. go to madmoney.cnbc.com and use our channel finder to locate it on your local cable system. let the games begin. [ male announcer ] starts with arthritis paing day setand a choice.ews take tylenol or take aleve, the #1 recommended pain reliever by orthopedic doctors. just two aleve can keep pain away all day. back to the news. with features like scanning a barcode to get detailed stock quotes to voice recognition. e-trade leads the way in wherever, whenever investing. download the ultimate in mobile investing apps, free, at e-trade. s new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge.

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♪ this morning coach just blew up. i mean, up. just totally imploded. >> the house of pain. >> the luxury handbag company reported a disappointing quarter. oh, boy [ baby crying ] the stock lost 11 points or 18% in one session. >> sell, sell, sell. >> but you know what was really odd? the oddest thing about this? coach didn't blame the rest of the world, r.o.w. some call it, for its troubles. like so many other companies have done during the earning cycle. no. in fact, the company actually said its international sales were pretty darn robust. the fault, as far as coach was concerned, was unbelievably in north america. ♪ where an increasingly promotional environment led to lower than expected growth at their factory stores. it wasn't the luxury side that killed them at all. it was the cheaper trade in

factory stores. remember, coach is a phenomenal operator. one of the greatest in all of retail. so if they're having a tough time, if they're struggling, if they're worrying about an overly promotional domestic environment, we have to take them seriously. i got to tell you, i mean, this coach quarter took my breath away. when it came out, i was just -- i was gasping. maybe wondered, how about this chicos? the chs, for you home gamers. the house of women's apparel brands, one of the best turnaround stories of the last years. over the last few days we've gotten a pair of dueling analyst reports on chicos. a week ago both morgan stanley and piper jaffray were neutral on chicos both at the same time. on friday, though, morgan stanley downgrade ed stock to underweight. yesterday piper upgraded it to overweight which doesn't mean chicos is too fat. it isn't one of those kinds of stores. it's actually a compliment.

gibberish meaning stock is a buy. we have to figure it out, who's right? i have to admit yesterday before we got these rulesults from coa i would have sided with piper without a moment's hesitation. as we recommended the stock as recently as may 24th when it was only a few cents below where it is now. under the leadership of david dire, former ceo who came out of retireme retirement to take back the helm in 2009, chicos has a resurgence. operating higher end white house black market and soma, a lingerie store for wealthy middle age women. restored the boutique image, closed unproductive stores, cut cost and generally got the company back on track which resulted in chicos reporting a spectacular quarter. but that was last february. in response to that quarter, the stocks soared in $12 to $15 and though the most recent quarter was pretty darn good, chicos has been treading water, trading

around 15 bucks ever since. yesterday i would have told you chicos is almost certainly a terrific deal at these levels. however, today, after the coach blowup that took my breath away, with the kind of retail i think is very similar to chicos, you know, that puts chicos in the cross hairs. we shave to lend credence to th bearish argument from morgan stanley or at least let's do this, give it serious consideration. how do these two analysts end up with two radically different opinions on the same stock? in other words, let's do some analysis so we get better at analyzing stocks. bears at morgan stanley think the turnaround story could be cresting. 12 straight quarters, same store sales growth. they did challenge checks and challenge checks showed more items are on sale. on the other hand, the bullish analyst at piper says the worries of sale and promotional activity are overdone. they think new ideas in the stores could outweigh the effects of the markdowns.

there's the border macro picture. big economy. morgan stanley is concerned macro uncertainty will cause consumers to pull in and be careful with spending. piper doesn't address this fear at all in their upgrade. it's entirely a micropiece, focused 100% on what chico's doing to boost its sales and specific initiatives. for example, company has some color initiatives that piper believes will boost revenue growth in the second quarter and thinks chico's loyalty program could make a difference. loyalty programs have worked in a lot of cases. don't snicker. piper reports out this is what happened to chicos in 2003 in its heyday. mid-teens in the second quarter, upwards of 20%. i remember that. what a stock. they think something like that could be happening now, given the sales growth in the latest quarter. okay. who's right? where do i stand on chico's?

company reports in a little more than three weeks, august 27th. chicos ran up year to date, all that move happened right after the company reported the huge upside surprise in february and the stock jumped from 12 to 15. since then, chicos has been range bound. not like the stock had run up massively going into the quart r quarter. that's good. in theory, it shouldn't be too hard for them to pose some strong numbers. that's good, too. david dire, the turnaround artist, ceo is a master of upod which as you know by now is underpromised and overdelivered. chicos should be able to deliver a terrific quarter versus expectations. i keep thinking, oh, boy, coach, how coach blew in this morning. chicos as it happens is 100% domestic. most companies we say that's a good thing. we like domestic security in an

environment where europe is t l falling off a cliff, falling to pieces. coach makes me wonder whether chico's price point might be too high now. take morgan stanley's warnings about the macro environment hurting chico's seriously. long term i'm not backing away from chico's one bit. it's a fabulous story. stock is cheap. sells 12.6 times next year's earnings, 15% growth rate. that's a classic growth, a regional priced stock. chico's believes they can open 120 new stores per year through the next several years. that's fabulous. only bringing the store base up from about 1,300 to over 2,000. impressive. a main competitor, talbots, closing stores. that's good for them. chico's has a lot of room to expand its margins. in other words, so many positives here. so would i buy the stock ahead of the quarter? toughie. here's what i think. we get any strength between now and august 22nd, chico's runs up into the quarter, i would use the lift to take profits. ring the register. if the stock sells off after the quarter, go back at a lower price because i am not changing

my view about the long term. here's the bottom line. sometime when two analysts disagree, they both can be right. piper jaffray upgraded chico's. i agree, this is a fabulous long-term turnaround story hence our long-term recommendation. i also have to give credence to morgan stanley's downgrade after coach today. the weaker macro environment might mean right now you don't want to hold on to this stock going into the quarter. ch chico's rallies over the next few weeks, sell, sell, sell. if it pulls back after its report on august 22nd, you have a great opportunity to buy a great long-term investment. short-term weakness. why don't we start the questions with jonathan in massachusetts? jonathan? >> caller: hey, jim, boo-yah from boston. >> oh, man, boo-yah back at you. another team that's kind of out of the race. what's up? >> caller: i have a question about a couple retail stocks. pbh and ralph lauren. >> uh-huh. >> caller: i know they've both gotten beaten up over the last few months and ralph lauren had

the olympic situation with the uniforms. are either one of those make sense to buy right now and if not what would be a domestic alternative? >> the stocks got hit off of coach. i think that's not done. why? because coach was such a take a breath away situation. i believe there will be another analyst who gets nervous and downgrades one of these two or both tomorrow and then we will relook at them at lower levels. i see no catalyst right now to buy these two stocks. i want to go to deborah in tennessee. deborah? >> caller: hey, jim. i was wondering what you think of mattress firm and their domestic security and have they bit more than they can chew off with this acquisition? >> i have to tell you that i will not recommend a mattress company on this show. they have become such battlegrounds. count me out. there's so many stocks, it's not a battlegrounds. i do not need to wade into your bedroom, get into your bed and start losing you money which i regard as the worst thing that can happen when it -- you know what i mean. anyway -- i mean that's generic,

okay? when analysts disagree, you win. i agree with piper that chs is a good long-term story, but i agree with morgan stanley right now that the short-term concerns are valid. if chs rallies, a la coach, ring the register. but stay with cramer. coming up, dry spell. drought conditions in the midwest have caused commodity prices to spike. and tonight, cramer's checking the technicals to make sure you don't bite off more than you can chew, when he goes "off the charts." [ male announcer ] now you can swipe... scroll... tap... pinch... and zoom... in your car. introducing the all-new cadillac xts with cue.

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it is time. it is time for the "lightning round." on cramer's "mad money." what's that? rapid-fire questions. say the name of the stock, tell you whether to buy, buy, buy, sell, sell, sell. play this sound. and then the "lightning round" is over. are you ready, skee-daddy? start with the "lightning round." cramer's "mad money." going to start with don in north carolina. don in. >> caller: how you doing, jim in

enjoy you for an hour every day on the treadmill. good for the body and good for the mind. >> i like that, man, body and mind. i'm kind of like a zen guy. he's got zen. go ahead. >> caller: there you go. give me u.s. steel. code x. >> look, this looks like a bottom in u.s. steel. the chart looks like a bottom. >> buy, buy, buy. >> they beat the numbers. i'm going to say, yes to letter x. how about alan in maryland? ellen? >> caller: hey, jimmy. you make it possible for me to pay my mortgage. >> yes! there we go. take that. take that, you people who are naysayers. i'm sorry. go ahead. go ahead. what stock? anybody catch that? >> caller: ebay. >> oh, man, is that unbelievable. >> buy, buy, buy. >> a terrific piece by my friend jon stewart this weekend in "the new york times." everybody should read it. the revolution of ebay. actionownersplus.com owns it. this company has game. it's the survivor of the dotcom

period. jim in my home state of pennsylvania. jim? >> caller: hey, boo-yah from happy valley. hey, jim, my stock is veolia, ve. >> that's a tough one. i don't like that -- >> sell, sell, sell. >> there's a lot better plays out there. let's go to john in new york. john? >> caller: hey, boo-yah, cramer. john from utica, new york. >> like it. >> caller: what do you think about pricesmart? psmt. >> no, i tell you, i will take your pricesmart, i'll see that and raise you with petsmart which is much better. >> buy, buy, buy. >> that's the one you want to be. let's go to alex in illini. >> caller: gardner denver. >> ixnay on that one though it's trying to make a comeback. i want to go to jeff in illinois. jeff? >> caller: boo-boo-boo-yah professor jim. >> thank you for giving me tenure. how can i help? >> caller: i want to tell you, i seldom miss a program.

i hope you know the stuff you're doing for all of us is so important. i just want to say thank you. >> thank you very much for saying that. it means the world to me. every day i come out to play. love to hear we're doing a good job. what's up? >> caller: all right. i'm looking at a bank stock to add to an already diversified portfolio. i'm looking at it as an investment, not a trade. reinvest the dividends. tell me my preceptor, what do you think of bmo? >> bmo? you talking about the bank of montreal? i've been criticized at jim cramer on twitter for not recommending enough canadian stocks. my bad. the bank of montreal rocks. >> buy, buy, buy. >> i want to be a buyer. let's go to johnny in california. johnny? >> caller: boo-boo-boo-boo-yah, cramer. >> good stutter boo-yah. what's going on? >> caller: i have two questions for you. what do you think of digital l

realty? >> digital realty is a good company, good yield. the scoreboard, we yuused to ha the phillies numbers up there. i couldn't take it anymore. i thought the reason the phillies were playing so badly is because i put their numbers up. it's actually now the oakland's a's which nobody cares about in the room. that, ladies and gentlemen is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. the l and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?

m bara[romney singing]: oh beautiful, for spacious skies, when you open a new account orapprove this message.(k). for amber waves of grain, for purple mountains majesty, above the fruited plain, america, america, god shed his grace on thee, and crowned thy good, with brotherhood... toit's nearly impossible. and train by myself, behind team usa stands another team. family... i lead the cheering section for tatyana. friends... i push her, i push her a lot. coaches... i take some of the pressure off. he takes some of the pressure off. she's a fierce competitor. when you meet sanya for the first time, you better tighten up your skates. thanks coach. bp is honored to be part of the support network for team usa. the team that stands for us all.

believe it or not, the most important thing happening right now for the u.s. economy isn't the european central bank meeting tomorrow. where europe just might sort out some of its problems. isn't the federal reserve meeting either. no, from the perspective of many americans and all american food shoppers, most important thing going on at this very moment is the weather. the scorching hot weather. the moment we forget it, the darn food prices are going to sneak up on us and create a real inflationary conundrum. at a time of slowing economic growth. right now, the midwest, the agricultural heartland of america, is experiencing what might turn out to be the worst

drought since 1955 which happens to be the year i was born. the lack of rain is killing the crops all over the place. and that in turn caused the price of corn and soybeans, not lima beans but genuine soybeans to rocket. with corn making a new high, all-time high today. and that means a lot more than higher food prices. corn and soy are used as the basic building blocks of all kinds of products. everything from fuel to feed to food. if these moves continue, they could be in a position to annihilate earnings for a whole list of national companies especially food and beverage names that aren't hedged. that's why tonight we're going "off the charts" with the help of mark sebastian, fantastic technician and chief operating officer at optionpit.com to try to find out where corn and soy could be headed. let's start with corn, if you don't mind. that's rallied about 50% in the last few weeks. and more than 20% since just july 4th. all right. take a look at corn's chart.

how robust is this rally? sebastian points out chicago exchange which regulates futures trading raised the marginal requirements on corn not once but twice this month. have to put up more cash if you want to buy corn futures. it was silver in april. the metal went on to lose a third of its value. but corn? both times they jacked up the marginal requirements corn took a breather but it roared back up. that's a true sign of a bubble caused by genuine scarcity. that's not speculation. the fact is corn is literally toast. it's essentially cooked across the entire midwest. if we get rain in the next few weeks some of the corn crop might be salvageable. sebastian believes crops are going to be worse than the most bearish reports out of the usda. the food, beverage, cattle and chicken industry are, because they're trying to preserve their businesses.

they have to get the corn in they need for their products. how high could corn go? okay. check out this close-up of the daily action of corn futures. when the cme raised requirements for corn, commodities initially sold off, okay, initially sold off, $7.76 a bushel which sebastian sees as a floor of support. it bounced right back. okay. bounced right back between the floor and ceiling, distance, about $7.95 for a few days before it broke out above $8 a bushel. since then corn has been off to the races. in sebastian's opinion, at this point about the only thing holding the price of corn back below $8.25 a bushel has been the strong dollar. if we don't get rain very, very soon, the sky could be the limit. a glancing blow. that's less of a blow than some of the boxers are doing, you know, in our normal 6:00 -- whatever. so what could stop this terrifying corn rally other than a well executed native american rain dance? sebastian sees three ways this could play out.

first, corn prices rise to the point where the commodity self-creates its own top. remember oil how it peaked in 2008? high prices caused economies around the world to slow which destroyed demand for the fuel. corn, this is a staple. it's basic to the food chain. i don't see this option becoming very likely. second, there's always time. we can regrow corn in other more fertile regions of the world. remember the harvest is going to go south now. next year there will be another corn crop here in the u.s. while the elevated prices are harsh, they can't last forever. by the time next spring rolls around sebastian expects the hope of a new crop will help the price of corn. that's a long way off. sebastian suggests the epa and states drop the ethanol additive requirement for gasoline. this would be a good idea, if corn prices hadn't gone through the roof, right now, it's a great idea. we're literally burning corn, a food in high demand, desperately short supply, in order to create ethanol, a fuel no one wants which nobody would use if the government didn't legally mandate it. not only would this make corn

immediately cheaper but lower the price you pay at the pump. however, our government can't get anything right. if we don't get rain soon, sebastian is is confident corn could go up to $8.50 a bushel or $9 if the dollar weakens. $10 corn, $10 corn shouldn't surprise us. although the sticker shock at the supermarket this fall surely will. okay. how about the soybeans? okay. they look like lima beans. remember your mom made you eat lima beans. anyway, take a look at soy's chart. soybeans are up only about 10% since july 4th. they aren't the total nightmare that corn has been, but sebastian thinks soy is very much on the tipping point and could get a whole lot worse or a lot better if you got some soybeans to bring to the market. drats. this year i grew string beans, not soybeans. but i bet they'll sell real well when i open my farm stand at the shore a couple weeks from now where i gouge all the people getting on the bus. unlike corn, when the chicago mercantile exchange jacked up requirements for soybeans on

july 20th, this commodity got hammered although since then it made up ground. after the margin hike, pulled back from its floor and since then rallied back up, though the commodity has yesterday to break out before it was before they jacked up the marginal requirements. if we go another week without rain, sebastian expects soy will make the same type of monumental move corn made over the last few days, breaking to the upside and busting through the recent records. just like corn, if we don't get rain, he thinks soy might not stop until demand is crushed or we grow a new crop of the stuff which is not a good thing for the economy. is there a way for you to play these moves? i hate to bet on commodities other than gold. it's not my strength. sebastian agrees it's dangerous to invest in a graying economy. we reiterate what technician tim collins said last week that monsanto, that's right, monsanto, the seed play, is the best farm story there is. at least when it comes to

stocks. the bottom line is that the skyrocketing prices of corn and soybeans are something you need to keep on your radar because they could do a lot of damage to the entire economy. not just the food stocks. nothing drains the consumers' pocketbook like a rise in the price of food. keep an eye on these charts and most important keep an eye on the weather report. because if we get some rain, this scorched earth problem can at least be a miverted. otherwise, consider this one a tax. not unlike higher gasoline taxes. get ready to spend more of your hard earned dollars on food than you have in any time in decades. "mad money's" back after the break. taking control of your financial destiny is smart, but why would you go it alone? >> something that has a much larger bearing on you and the stock market as a whole. >> let cramer be your guide. your sounding board. >> i'm having a hard time with my favorite stock. >> i know you can beat these professionals. >> and your coach on the road to

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did you notice how apple with its glorious 15-point rally today -- ♪ hallelujah. >> is back to where it was before it reported the so-called disappointing quarter, that was supposed to mean the story had now run its course and apple was dead? how was it possible this stock

could have such a -- simple, because apple like any other company in the universe has a real issue with timing. it has to do the unthinkable, introduce breakthrough products without freezing the market and creating sales of soon to be obsolete models. apple has to judge its demand, millions of units and meet that demand in a market where it doesn't control its own food chain. i've never seen a more difficult mine kne minefield to navigate through. periodically the company can't show its hand and only to game the short-term numbers. what's behind apple's rebound? a comment made by jaffrays where it could unveil a new home. i'm attributing it to the company that holds the key to apple's audio greatness. they talked about an out of control sequential guideup, a 70% jump in revenues from the prior quarter. the 70% jump is the single most bountiful linked quarter leap i've ever heard of.

sirrus logic isn't allowed to mention apple's name or they risk losing all the business. you can't blame apple for kpi existing on tight controls of what's said about its order. cirrus logic could get in the way. they're not allowed -- the big customer, the big client -- like clifford the big red dog. with a guideup that huge, contribute it to a gigantic iphone bill, using cirrus logic next generation technology, chips that use the least amount of power. cirrus has been the envy in the chips industry because it's had brilliant engineers. i used to recommend sears logic all the time on the show, got caught up in the unpredictability of its earnings, because of its attachment to the secret of apple. i backed off. my mistake. stock has been a monster. all this back and forth on apple, why i insist you not get into the habit of trading or renting the stock. instead, you should, as i say repeatedly, just own the darn thing. remember i came out, said, don't trade it, own it.

can't let the timing get in the way of owning this great company simply because they can't be gamed even by the suppliers let alone the buyers. apple has products ahead of it, some we don't know about, that could be on cirrus' screen including the i-television. sears can't predict it. the company's strategies are mysterious to all but those who believe in apple. including me. the whole darn way. stick with apple. stick with cramer. this is $100,000.

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