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Jim Cramer is sounding the alarm, but not in the way you might expect. For those bullish on Nvidia Corp (NASDAQ:NVDA) and Apple Inc (NASDAQ:AAPL), Cramer’s latest view may be hard to swallow.
Hot money flowing out of Nvidia and Apple
In a tweetCramer said, “The hot money is flowing from Nvidia and Apple into China. Let it flow. Don’t defend this now. Make this money go away. About China, only BABA has basic factual data if necessary… But let it rain here. Make sure you can play all these short Nvidia options and ETFs.”
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The reasoning? Cramer hints that Nvidia’s sky-high valuations and Apple’s post-iPhone slump could leave them vulnerable to short-term pain. If you hold Nvidia options or ETFs, Cramer thinks you might want to ride the short wave.
Cramer’s suggestion is a subtle signal that a pullback is looming, especially as investor sentiment shifts and valuations start to look more tense than a Friday night binge watch.
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Only Alibaba has actual basic principles, says Jim Cramer
Where should the more adventurous traders look? According to Cramer, only one Chinese juggernaut is worth considering amid the capital outflow into China: Alibaba Group Holdings Ltd (NYSE:BABA) (NYSE:BABAF).
The e-commerce giant is backed by solid fundamentals despite the regulatory hurdles. The GraniteShares 2x Long BABA Daily ETF (NASDAQ:BABX) provides leveraged exposure to Alibaba stock. Other ETFs with a substantial allocation to Alibaba shares in their portfolios include the iShares MSCI China ETF (NASDAQ:MCHI) (8.96% Alibaba shares), iShares China Large-Cap ETF (NYSE:FXI) (9.03% Alibaba shares) and the KraneShares CSI China Internet ETF (NYSE:KWEB) (11.05% allocation to Alibaba shares).
If you want to venture into the Chinese markets, BABA may be your best bet; However, don’t expect smooth sailing.
Cramer’s latest recommendation suggests patience with Nvidia and Apple, giving short sellers their chance, and continuing to take a cautious but interested look at Alibaba’s potential for a recovery.
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This article Cramer Says ‘Hot Money’ Flows From Nvidia, Apple To China, Focus On Alibaba ‘If You Must’ originally appeared on Benzinga.com
