Cramer's 'Mad Money' Recap: Signs of a Healthy Market (Final)

Search Jim Cramer's Mad Money trading recommendations using our exclusive Mad Money Stock Screener and watch Jim Cramer's Mad Money Post Game video exclusively on TheStreet.com.

---

NEW YORK (TheStreet) -- With the Dow Jones Industrial Average hitting a new high for the year, Jim Cramer donned his doctor's lab coat and told viewers of his "Mad Money" TV show that he was going to take the pulse of the market to see whether it was truly healthy.

The checkup consisted of 10 tests that Cramer said he's been using for years to take the temperature of an illusive market. This is what he saw:

1. A Rally in Transports. Cramer said this is important because the transports represent the movement of goods and people. If the transports are rallying, commerce is picking up, he said.

2. Strength in Banking. Cramer said our economy runs on credit, so a rally in the banking index means that credit conditions are improving.

3. Market Upgrades in Stocks. Cramer said that when Lincoln National (LNC) received an upgrade today, the stock rallied 4.4%. He said it's a good sign when stocks respond to upgrades.

4. Leadership in Tech. Cramer said he's seeing rallies in all of the bellwether tech names, and they're lifting the whole tech sector.

5. Cash on the Sidelines. Cramer said that with so many investors still with cash in reserve, there's still a lot of money that hasn't hit the markets yet.

6. Strength in Mergers. Cramer said when companies like Massey Energy (MEE) announce an acquisition, normally that stock would go down. But in a bull market, even the acquiring stock rallies, he said.

7. Strength in Secondary Offerings.Hartford Financial (HIG) rallied 5% on news of its secondary offering of stock. This is bullish news, he said.

8. Strength in IPOs. Cramer looked at today's IPO of Financial Engine (FNGN), which closed higher, indicating that even the IPO market is heating up.

9. Market Breadth. Cramer said with so many stocks advancing, and fewer and fewer declining, the market breadth is signaling a healthy market.

10. Skepticism at All-Time Highs. While it may seem counter intuitive, Cramer said the tons of market skeptics are good news, as one by one they'll change their minds, adding fuel to the market's fire.

Cramer said he would be worried if there were danger signs in the market, but he said his 10 checkup tests point to more upside coming.

Tweet