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Jim Cramer's 'Mad Money' Recap: Reflections on a Golden High

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NEW YORK (TheStreet) -- All-time highs are a time for reflection, Jim Cramer reminded his Mad Money viewers Tuesday. The markets are more expensive than they were Monday, and that condition will eventually put a kink into our "buy low, sell high" strategy.

New highs inject confidence into the markets, which keeps the investment bankers very busy lining up the parade of mergers, acquisitions and takeovers that we've been seeing lately. Whether it's DirecTV (DTV) or AstraZeneca (AZN), Cramer said to expect a lot more activity in the food, drug and oil sectors. He also expects Sprint (S) to make a bid for T-Mobile (TMUS) before the end of the month.

Yet, despite the new highs and the many mergers, Cramer said there are still whole segments of the markets that are lagging the averages and are exceedingly cheap. The industrials is one such group, the airlines are another. American Airlines (AAL), for example, trades at just six times next year's earnings compared to the market average of 17 times.

No reflection would be complete without also examining the bear case. Cramer admitted that while some sectors of the market are reasonably priced, others -- like the software-as-a-service stocks, the 3-D printers, e-commerce, early-stage biotechs and anything relating to fuel cells -- still have room to fall. Case in point, Splunk (SPLK), which inexplicably fell over 8% in today's session. These stocks are not yet on solid ground, Cramer said.

Overall, Cramer still thinks the rewards outweighs the risks, but investors need to be cautious in the stocks they choose.

Off the Charts

In the "Off The Charts" segment, Cramer went head to head with colleague Carly Garner to see what the technicals are saying about the Nasdaq and how it compares to the S&P 500 index.

Using a daily chart of the two indices, Garner noted the Nasdaq tend to lead the S&P. In February, strong buying in the Nasdaq led the S&P higher while in April, strong selling in the Nasdaq led the broader markets lowers. She concluded that continued selling in the Nasdaq will eventually begin to weigh on the S&P.

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