Big-Cap Stocks Are Back

Big-cap stocks are back in a big way.

Last week brought huge moves in some big industrial stocks that aren't typically associated with fast-money trading. The moves -- including double-digit single-day percentage gains in the likes of Whirlpool (WHR Quote) and Cummins (CUM Quote) -- come as strong overseas growth and a falling dollar have bolstered profits at companies that were saddled with few near-term expectations.

The high-octane action could point to a shift toward big stocks from the small- and mid-cap names that have done so well over the last five years. It also shows how the market's recent record run has raised the stakes for bulls and bears alike.

Short interest has been rising in a signal that some investors believe stocks are due for a fall. But stocks with heavy short interest have put in some incredible one-day gains -- showing the field is crowded with eager bulls, too.

"Can you say short-covering?" quips Charles Biderman, CEO and publisher of Trim Tabs Investment Research, referring to huge runs in names such as Amazon.com(AMZN Quote) and Texas Instruments (TXN Quote).

Much has been made of the Dow Jones Industrial Average's 6% gain over the last month, which has taken it to record levels above 13,000. Yet the Nasdaq saw a record level of short interest last month, and 69% of hedge funds reported being bearish at the start of April, according to Greenwich Alternative Investments' sentiment indicators.

And while short interest measures bets against a stock, investors often consider rising short positions a contrarian bullish sign -- a tally of unrealized buy orders.

Those unrealized orders can become realized ones rather quickly, as investors in Amazon learned this week. Amazon surged 27% Wednesday and an added 11% Thursday after posting an earnings blowout Tuesday evening.

For Jim Cramer's take on the company discussed in this article, please click here for his Wall St. Confidential video.