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Cramer's 'Mad Money' Recap: Tech Tonic

Scott Rutt

Click here for an archive of Jim Cramer's Mad Money recaps.

Jim Cramer explored the intricacies of market momentum on a shortened, midday episode of his Mad Money TV show Tuesday.

He said that much of the recent market action has to do with momentum and not the fundamentals. This means that some hard-and-fast rules of investing may have to be temporarily suspended until this move is over, he said.

Cramer said that one such hard-and-fast rule is to sell tech stocks in February and not look back until the fall. In fact, in 16 of the past 17 years, this rule has held true, he said.

However, the recent market momentum is clearly in the tech stocks' favor, with companies like Intel (INTC Quote), Microsoft (MSFT Quote), Google (GOOG Quote), Apple (AAPL Quote), Research In Motion (RIMM Quote), Amazon.com (AMZN Quote) and even Qualcomm (QCOM Quote), which he also chose for his Action Alerts PLUS portfolio, and Applied Materials (AMAT Quote) either trending higher or making positive comments about their outlooks.

Cramer expects to see continued sector rotation out of the oil and natural gas sectors and into these seemingly inflated tech names.

Cramer also reiterated his price target for oil at $110 a barrel or $3.50 a gallon for gasoline. While he said it's tempting to consider $80 to $90 for a barrel of oil, the real demand, he feels, continues to be at the $110 level.

A Winning Recipe

In his new "Executive Decision" segment, Cramer talked with General Mills ( GIS Quote) president and CEO Ken Powell about the company's stronger-than-expected earnings despite rising input costs.

Powell noted that General Mills first predicted raw cost inflation in 2003 and 2004, when the company began taking steps to combat them. He said that the company has an intensive, holistic approach to eliminate waste and cut costs.

Powell also cited strong international growth as a key to the company's continued success. With 25% of the company's sales now overseas, Powell sees continued growth in China and in other overseas markets.

Finally, Powell said that new products and innovation are driving his company forward. He noted the company's "Fiber One" brand as one that's doing exceptionally well in an otherwise difficult market.

Outrage of the Day

In this segment, Cramer called out Fortress Investment Group (FIG Quote) chairman and CEO Wes Edens for his $300 million payment to CIO Adam Levinson while the company posted a $55.6 million loss for the quarter with revenues falling 30%.

Cramer also directed viewers to the recent action in Great Atlantic & Pacific (GAP Quote), which also posted a horrible quarter, but is now seeing strong insider buying.

Finally, Cramer said the time is now right to buy Fluor (FLR Quote). He said the stock has fallen way to far in relation to the price of oil and natural gas. He's also bullish on Nabors Industries (NBR Quote) and Halliburton (HAL Quote).

Cramer also sees strength in the defense contractors ahead of the Republican Convention. He recommended General Dynamics (GD Quote), L-3 Communications (LLL Quote), Northrop Grumman (NOC Quote) and Raytheon (RTN Quote) as great short-term plays.

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