Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
NEW YORK ( TheStreet) -- Today's relief rally in the markets is a good start, Jim Cramer said Tuesday on Mad Money, but for the rally to continue there are a bunch of things that have to go the bulls' way.
Cramer explained that the markets have been pushed lower buy the pending Alibaba initial public offering, which forced big money managers to liquidate some of their holdings to make room for this fast-growing Chinese Internet play. But now that fund managers are ready for action, the markets can rebound -- but only if a few other things go right.Cramer said that the markets first need to hear from the Federal Reserve. The market needs to hear language that the central bankers are flexible, basing their interest rate decisions on data and not on a rigid timeline. If the markets know the Fed has their back, the rally can continue. Read More: 10 Stocks Carl Icahn Loves in 2014 The markets also need the Alibaba IPO to go off without a hitch. Cramer said if shares see more than a modest rally the fearmongers will be out in force, likening the deal to the dot-com bust of 2001. Next, the markets need to see the European Central Bank's bond buying program to stabilize the euro and stop the U.S. dollar's strengthening. The markets could also benefit from oil prices stabilizing, Cramer said. Finally, the markets need companies to keep doing what they've been doing, which is rewarding shareholders with acquisitions, breakups, dividends and buybacks. If just some of these can happen, the rally will continue, Cramer concluded. If not, then we could be in for a rocky ride.
Tips From Beyond the Business PagesSometimes the best investment ideas come from the strangest of places, Cramer told viewers. That's why investors need to read a lot more than just the business pages. Case in point: the Sept 15 issue of The New Yorker featured an article entitled "The Transformation" that detailed the promise of controlling cancer without killing it. Cramer said this article explored the exciting new treatments currently under development at Agios Pharmaceuticals (AGIO) , which rather than targeting and killing cancer directly merely changes its metabolism, rendering it harmless. Cramer cautioned that Agios' drug, AG-120, is only in Phase I testing and has only been administered to a few dozen patients. But the results so far have been staggering, which makes Agios a continued buy. Cramer first recommended Agios after its July 2013 IPO, and he continues to like the company's research and its partnership with Celgene (CELG) , which owns 11.6% of the company. Read More: Why the Fed Should Hold Off Signaling Higher Rates for Now With drugs still years away, Cramer said Agios trades on news and catalysts and not on any traditional metrics such as earnings. But with those caveats in mind, the company shows a lot of promise.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV