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The Dow Disconnect: Cramer's 'Mad Money' Recap (Tuesday 4/14/20)

Jim Cramer says there are good reasons the giant companies and the DJIA are climbing, but don't forget they don't represent the whole economy.
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How does the stock market keep rallying when over 16 million Americans have lost their jobs in the past three weeks? Jim Cramer told his Mad Money viewers Tuesday that it's because the major averages are made up of our biggest companies and they're not really representative of our economy.

Cramer outlined four reasons why stocks are able to ignore the reality outside and power higher. The first reason is that our government is pulling out all of the stops to save our economy. From monetary policy to stimulus packages, nearly every facet of our government is making unprecedented moves to move past this crisis.

Second, Cramer said, investors had gotten too negative. Stocks suffered historic losses in late February and early March. But once more information was known about COVID-19 and the government took action, those fears were overdone.

The third reason stocks are able to soar is that big companies get bigger when times get tough and big companies are what make up the Dow Jones Industrial Average. Just look at Amazon  (AMZN) , which has seen its stock price soar while many mom-and-pop retailers are going under.

Finally, Cramer said, the markets are rallying on hopes for a vaccine. We have many great drug makers working around the clock to bring a vaccine to market as early as next year and investors are pinning their hopes on companies like GlaxoSmithKline  (GSK)  and Johnson & Johnson  (JNJ) .

Add them all up and it's easy to see why stocks have seemingly become disconnected from reality and will continue to roar higher.

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Executive Decision: GlaxoSmithKline

For his "Executive Decision" segment, Cramer spoke with Emma Walmsley, CEO of GlaxoSmithKline, the drugmaker which today announced a partnership with Sanofi  (SNY)  to co-develop a COVID-19 vaccine. 

Walmsley said their collaboration with Sanofi brings together two leaders in vaccine production, combining Sanofi's antigens with Glaxo's adjuvant therapies to create a COVID-19 vaccine that can be made at scale. She said if all goes well, the duo could be producing as many as hundreds of millions of doses by the end of 2021. 

Walmsley cautioned that there is still a lot of work to be done and much is still unknown about this coronavirus. But both Glaxo and Sanofi are bringing proven technologies to this task and, with the help of regulators, are hopeful they'll be able to beat this virus quickly.

There are no guarantees, Walmsley added, and this crisis has proven the need for more pandemic preparedness around the globe. Now is not the time for competition, she said, it's a time for collaboration and partnership as well as a commitment to access for all countries, rich and poor, around the world. 

The world won't be able to return to normal until we have antibody therapies, vaccines and treatments, Walmsley noted. Until then, we'll likely all have to adjust to new ways of living and working.

Executive Decision: BioReference Laboratories

In his second "Executive Decision" segment, Cramer also checked in with Dr. Jon Cohen, chairman of BioReference Laboratories, a company on the cutting edge of COVID-19 testing. BioReference Laboratories is part of OPKO Health  (OPK)

Cohen explained that when it comes to the coronavirus, there are two types of testing. The first looks for the virus itself and is available now in limited quantities. The second type of test looks for antibodies to the virus. That test will be coming in a matter of weeks and will be available in far larger quantities. 

The virus detection tests we have today are highly complex, Cohen said. His company is currently using four different platforms that each require their own recipe to produce accurate results. BioReference Labs is running continually, producing up to 20,000 results a day. He said no one was built for this magnitude of testing and it's amazing to think they've already produced 250,000 results for a test they had never run five weeks ago.

The antibody test will be the most important, Cohen noted. That test will allow labs to produce hundreds of thousands of results per day.

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When asked about the severity of the disease, Cohen said we still don't know why some people die from COVID-19 while others are asymptomatic, but one thing we do know is that it has killed people in every age group.

Off the Charts: Defense Contractors

In the "Off The Charts" segment, Cramer checked in with colleague Bob Lang over the charts of the defense contractors, a group that was left for dead just a month ago. 

Lang first looked at a daily chart of Raytheon Technologies  (RTX) , noting that the stock has already erased half of its earlier losses. Raytheon was his favorite in the group, given that the stock could surge to $80 a share before reaching any resistance. 

Next was L3Harris  (LHX) , a stock which had a strong ceiling of resistance at $192 a share before surging to $197 Tuesday. Lang was also in favor of buying L3Harris at these levels. 

Lockheed Martin  (LMT)  ran up against its 200-day moving average only to pull back, Lang noted, but now the stock is seeing a bullish crossover in its MACD momentum indicator and is surging to $380 a share. Cramer was less of a fan given that Lockheed lacks the growth of the other two. 

Finally, Lang looked at Northrop Grumman  (NOC) . He said that while the RSI is strong and the stock is making higher highs and higher lows, the chart is his least favorite in the defense space.

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Your Money or Your Life?

In his "No-Huddle Offense" segment, Cramer said we are stuck between a rock and a hard place. We want our economy to reopen, but we can't afford another outbreak. What needs to happen before it's safe to reopen? Cramer outlined a recipe for success.  

First, Cramer said we need easy testing. Everyone needs to know whether or not they've been exposed. Second, we need everyone to wear masks outside to lessen the spread once we begin to venture out again. Third, we need contact tracing, like that proposed by Apple  (AAPL)  and Google  (GOOGL) , which will allow another with a phone to know whether they've been close to someone who has the virus. 

Finally, Cramer said we need a vaccine. But with vaccines likely still a year or more away, we need at least an antiviral treatment to lessen the severity for those who have been exposed. 

Without all four of these things, Cramer said he fears we'll be right back where we started.

Lightning Round

Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round Tuesday evening: 

Alcoa  (AA) : "I don't like the metals here." 

Livongo Health  (LVGO) : "This is in the sweet spot of health technology." 

Oneok  (OKE) : "They got an upgrade today and I believe the dividend looks good, but that whole group is hurting." 

Tesla  (TSLA) : "Tesla goes higher. Period." 

Xerox  (XRX) : "That's a mistake. That HP takeover was embarrassing." 

SunPower  (SPWR) : "I'm not a fan. I'd stick with Tesla." 

Carnival  (CCL) : "Anything is possible, but I don't care for the industry right now." 

Pinterest  (PINS) : "I thought they were good but they withdrew their guidance. I think they're OK."

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At the time of publication, Cramer's Action Alerts PLUS had a position in AMZN, JNJ, AAPL, GOOGL.