Stock Market Today With Jim Cramer: AMC Surge Was a Short Squeeze

Stocks were rising Wednesday amid low trading volumes as investors looked ahead to a Federal Reserve gathering at the end of the week.

Jim Cramer and TheStreet Senior Portfolio Analyst Jeff Marks talked about meme stocks and Toll Brothers latest earnings.

Meme Stocks

GameStop  (GME) – Get Report shares moved higher Wednesday, alongside gains for AMC Entertainment  (AMC) – Get Report, as investors scrambled to find clues behind the strongest rally in so-called meme stocks in more than two months.

Cramer said the read-through from Best Buy  (BBY) – Get Report was buy GameStop “because some of the best products Best Buy is in short supply of GameStop has. So, that was good.”

“The AMC [surge] was probably a short squeeze because box office was good this week at Disney Movies, for the second time. And there was a belief that with the Delta variant, that would start dropping,” he explained.

“So, I think the longs press the shorts. … Watch the out-of-the-money calls because those are the ones that are historically very hard to hedge,” Cramer added.

Toll Brothers: Buy Or Sell?

Toll Brothers  (TOL) – Get Report revenue in the latest quarter soared 37% amid heated pandemic demand but still barely topped estimates.

For the fiscal 2021 third quarter ended July 31, revenue at the luxury-home builder totaled $2.26 billion, up from $1.65 billion in the year-earlier quarter. The FactSet analyst consensus called for $2.25 billion in the latest quarter.

Cramer said that “a lot of people, and this is more for the [Action Alerts PLUS club], looked at the number of housing units closed and that number was 10,000 or 10,300 and therefore they presumed it was a bad quarter. That’s the kind of lazy thinking that I want to operate against.”

Cramer said investors instead should be looking at gross margins, which widened, “and that means they have a secular growth story going, particularly because millennials are looking for homes.”

None of these stocks are holdings in Jim Cramer’s Action Alerts PLUS investing club. Want to be alerted before Cramer adds or removes stocks from the portfolio? Learn more now.