Jim Cramer's 'Mad Money' Recap: I'll Tell You Why This Market Is Jumping
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The Brexit vote set off a chain reaction in the markets, Jim Cramer told his Mad Money viewers Monday, one that has investors propelling the markets to new all-time highs. How did that happen? Cramer explained.
Cramer said that first, many money managers simply got caught off guard, and were on the wrong side of the historic vote. That led to huge redemptions that sent the markets sharply lower, at the same time investors realized that Brexit was sending U.S. interest rates lower and keeping the Federal Reserve on hold.
Then there was last Friday's jobs report, which showed that jobs were becoming more plentiful and credit was flowing, giving consumers more money to spend.
The positivity was further bolstered by a wave of takeovers, led by WhiteWave Foods (WWAV) , and strong earnings in tech from the likes of Seagate (STX) - Get Report , which popped 12% today.
Finally, Cramer credited the strong stock market to investors finally getting their heads around this year's political candidates and what they might mean to corporate America if elected. Add all these positive factors up and you've got a recipe for a continuing rally, Cramer concluded.
10 Stocks to Watch
So is the rally in stocks for real or just a short-term bounce? Cramer said he remains skeptical until the following 10 stocks start to participate.
First up was Alphabet (GOOGL) - Get Report and Apple (AAPL) - Get Report , two stocks Cramer holds for Action Alerts PLUS. He said that may perceive growth has stalled at both tech giants, but Alphabet remains too cheap to ignore and Apple continues to have great long-term prospects.
Then there are the airlines, Cramer said. Investors can pick any of their favorites, but the markets need to see a sustained advance in this important sector.
Next on Cramer's list are Starbucks (SBUX) - Get Report , Nike (NKE) - Get Report and Visa (V) - Get Report , all momentum names that have lost their way. The same applied to retailer Target (TGT) - Get Report , which also made the list, along with Gilead Sciences (GILD) - Get Report and Allergan (AGN) - Get Report over in the healthcare space.
Finally, Cramer said he markets need a rally in Walt Disney (DIS) - Get Report , the most troublesome on the list. He said while revenue for ESPN are slowing, the true test will be if they're slowing enough to derail all of the positives in the company's movie and theme park franchises.
The Market at Mid Year
With the first half of 2016 now in the history books, Cramer performed a half-year retrospective to find out what the hottest sectors were, and why. In a surprising turn of events, the best-performing sectors were the utilities, telco and energy.
The utilities are normally a slow and steady group that rarely makes big moves, Cramer said, but given their reputation as the place to go in times of turmoil, it's not surprising that American Water Works (AWK) - Get Report was able to soar 41%, while stocks such as Excelon (EXC) - Get Report turned from laggard to most loved. Among the few true laggards in the group was PPL (PPL) - Get Report , which has U.K. exposure.
The telcos were the second best-performing group for many of the same reasons as the utilities. Their big dividends continue to be bond alternatives in a low interest rate environment. Among the biggest winners, AT&T (T) - Get Report , up 25% during the first half of 2016.
Finally, there are the energy stocks, which is not surprising given the huge rally in oil and natural gas prices. It only makes sense that the oil and gas stocks would follow. Among this group's biggest winners were Oneok (OKE) - Get Report , up a hefty 92%, and Southwest Energy (SWN) - Get Report up 77%.
Yield, yield and "saved by the recovery in oil" were the big trends so far in 2016, Cramer concluded.
Executive Decision: Klaus Kleinfeld
For his "Executive Decision" segment, Cramer kicked off earnings season by speaking to Klaus Kleinfeld, chairman and CEO of Alcoa (AA) - Get Report , he aluminum maker which just posted a 6-cents-a-share earnings beat. Shares of Alcoa rose 3.2% on the news.
Kleinfeld attributed Alcoa's strong earnings to continued cost cutting and productivity increases, which all continue to trickle down to the company's bottom line. He added that China remains a strong drive for Alcoa going forward.
When asked about the company's planned spinoff of its engineering business, which will be called Arconic, Kleinfeld said the split is still on track to be completed by 2017 and Arconic will be a premiere supplier to the automotive and aerospace industries as it expands beyond just aluminum into nickel and steel alloys as well.
Cramer said there are a lot of things to like at Alcoa, but told viewers to get to know the company before pulling the trigger and starting a position.
Lightning Round
In the Lightning Round, Cramer was bullish on First Solar (FSLR) - Get Report .
Cramer was bearish on Chegg (CHGG) - Get Report , Teladoc (TDOC) - Get Report and Cal-Maine Foods (CALM) - Get Report .
No Huddle Offense
In his "No Huddle Offense" segment, Cramer offered up five big themes that should propel your portfolio for the rest of 2016.
First is the notion of bond market equivalent stocks -- think utilities and master limited partnership stocks. These will continue to flourish in a low interest rate environment. Next was the takeover trend, exemplified today by WhiteWave Foods, but expect many more to come.
Third, Cramer said the Internet of Things trend is for real and extends beyond just homes and cars. He said the industrials and others sectors can also benefit and stocks such as Broadcom (AVGO) - Get Report should be big winners.
Then there's retail, which could expand beyond just Amazon.com (AMZN) - Get Report to include other well-run names including Home Depot (HD) - Get Report . Cramer's final trend: the continuing divergence between stocks and the strength of oil and the dollar.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, GOOGL, SBUX, V and WWAV.