The keepers of the Dow Jones Industrial Average are making some changes to the index, and while many investors were left scratching their heads at the news, Jim Cramer told his Mad Money viewers Tuesday that to him, the changes make perfect sense.
Perhaps the most surprising move was oil giant Exxon Mobil (XOM) - Get Report, once the biggest company on Earth, leaving the Dow and being replaced by tech giant Salesforce.com (CRM) - Get Report. Cramer said Exxon's fall from grace has been stunning, confirming his belief that the oil and gas sector is no longer investable.
The next change to the Dow was Pfizer (PFE) - Get Report being replaced by Amgen (AMGN) - Get Report. Cramer said this move also makes perfect sense, as all of the growth, innovation and excitement now comes from biotech. It hasn't come from big pharma in many years, he said, and while there are other names he would have chosen, Amgen is a fine representative of its sector.
Finally, Raytheon Technologies (RTX) - Get Report is being replaced by long-time Cramer favorite Honeywell (HON) - Get Report. Cramer said this change was the least surprising, as Raytheon's merger with parts of the old United Technologies made it too similar to another Dow component, Boeing (BA) - Get Report. Honeywell, on the other hand, is an innovation machine in a host of synergistic industries. Cramer called the company a true industrial.
Cramer said all of these moves help put the Dow Jones Industrial Average more in line with our new economy and will help it keep pace with the S&P 500 and Nasdaq.
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Executive Decision: Salesforce.com
In his first "Executive Decision" segment, Cramer welcomed back Marc Benioff, chairman and CEO of Salesforce.com, which just delivered a monster 47-cents-a-share earnings beat that sent shares soaring 12.2% after hours.
Benioff said these are challenging times and Salesforce had a choice to make. They could either stay the same or evolve how they do business. They chose to evolve. He said the results this quarter were a win for stakeholder capitalism, the philosophy that you can do well and do good at the same time. Salesforce did well for their customers, employees, shareholders and for all of the company's stakeholders.
Benioff said the planet also is a stakeholder to Salesforce. The company has pledged to plant 1 trillion trees in an effort to remove 200 gigatons of CO₂ and combat the effects of climate change.
Finally, when asked about their decision to allow employees to work from until summer 2021, Benioff said that not everyone is ready to go back to work. Salesforce is using its own Work.com platform to see that all of their offices open safely and that everyone is able to return to work when they're ready to do so.
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Executive Decision: Hormel Foods
For his second "Executive Decision" segment, Cramer also spoke with Jim Snee, president, chairman and CEO of Hormel Foods (HRL) - Get Report, another company that just reported record quarterly results.
Snee explained that Hormel saw strength in all of its iconic brands, such as Spam, but also in many of its lesser-known brands. He said Hormel is well diversified in its brands, businesses and distribution channels. That means when the food service is dramatically affected, as it has been during the pandemic, their other channels can step up and more than make up for the difference.
When asked about the strength in items like peanut butter, Snee said peanut butter has always been a staple in American households, but Skippy continues to innovate with squeezable products, no-added-sugar products and even peanut butter with extra protein.
Snee was also excited to talk about making a difference in their communities. Hormel's Inspired Pathways program allows every child of a Hormel employee to receive a free two-year community college education.
Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Tom DeMark, CEO of DeMark Analytics, over the trajectory of the market's current rally.
DeMark used several of his proprietary market models, including the TD Combo and TD sequential models, to determine that the rally in both the Dow Jones Industrial Average and S&P 500 are close to running out of steam. His models indicated that if the rally continues for just another few days, it will be likely to decline.
DeMark also used Fibonacci ratios to determine the potential upside of the market tops out at Dow 29,469.
Finally, DeMark compared the market action in 2020 to that of the crash in November 1929 through April 1930. The similarities were striking, but DeMark didn't feel we are likely headed into a depression.
In his "No Huddle Offense" segment, Cramer said if you can't beat them, join them. He was talking about the amateur traders who look for positive COVID-19 news first thing in the morning and if they find it, start buying up the recovery stocks in pre-market trading.
Cramer said he doesn't usually endorse pre-market trading because of the increased volatility. But there is a pattern among these amateur traders. So the next time there's positive news on the COVID-19 front, Cramer suggested buying Southwest Airlines (LUV) - Get Report, Norwegian Cruise Lines (NCLH) - Get Report, Hilton Worldwide Holdings (HLT) - Get Report, Simon Properties (SPG) - Get Report and Chipotle Mexican Grill (CMG) - Get Report.
That's the playbook that's been working, Cramer concluded, and it's likely to continue as long as stocks seemingly only trade higher.
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:
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At the time of publication, Cramer's Action Alerts PLUS had a position in HON, CRM.