Want to know what's driving the stock market to new highs? Jim Cramer told his Mad Money viewers Monday that it's not trade talks or the Federal Reserve, it's demand. The companies that have demand are in demand, and those that don't, aren't.
There's a big demand for money thanks to ultra-low interest rates, Cramer explained. That's why JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. (JPM) Report , Bank of America (BAC) - Get Bank of America Corp Report and just about all of the banks were able to overcome the industrial weakness with plain old consumer demand.
Housing is also in demand. While it accounts for 15% of our economy, Cramer said when you add in all of the ancillary businesses, including retail and payment processors like Visa (V) - Get Visa Inc. Class A Report , housing counts for a lot more than it appears to.
This quarter, we also saw demand for data. All of Cramer's "Cloud Kings" are soaring, as are the semiconductors like Intel (INTC) - Get Intel Corporation (INTC) Report and Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report . Anything linked to data is in demand.
Demands is also in places you wouldn't expect, Cramer added, like anti-cancer drugs, entertainment and even in air travel. That's why the drugmakers, plane manufacturers and everyone with a new streaming media service have also been rallying.
Investors wanting to know if the stocks in their portfolios have demand need to just listen to a company's conference call, Cramer concluded. Those companies with demand are clearly apparent.
Off the Charts: Discretionary Stocks
Is the broader economy in better shape than we've been led to believe? In his "Off The Charts" segment, Cramer checked in with colleague Bob Lang over the charts of the discretionary stocks to see just how strong the consumer really is.
Lang first looked at a daily chart of Winnebago (WGO) - Get Winnebago Industries, Inc. Report , noting the stock's recent move higher on strong volume. He also noted the bullish relative strength indicator, or RSI, and the strengthening MACD momentum indicator. Lang suggested waiting for a pullback before starting a position.
Lang saw a similar pattern in Polaris (PII) - Get Polaris Inc. Report , which also displayed a strong RSI and MACD as shares broke above their ceiling of resistance. Lang also liked the chart of Marriott Worldwide (VAC) - Get Marriott Vacations Worldwide Corporation Report , the timeshare company which he felt could hit highs of $120 or even $130 a share.
Lang was more cautious on Royal Caribbean Cruises (RCL) - Get Royal Caribbean Cruises Ltd. Report however. He noted this stock's "W" pattern, which could be forming a bottom. With advancing RSI and MACD indicators, Lang felt it wouldn't take a lot to get this stock moving in the right direction.
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Will Amazon Fight Back?
We recently learned the Pentagon has awarded a $10 billion cloud infrastructure contract to Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report , news that sent shares up a quick 2.4% by the close. Is this the beginning on the end for Amazon's (AMZN) - Get Amazon.com, Inc. Report Web Services?
Cramer said the Pentagon's JEDI contract could be worth between $2 and $10 a share to Microsoft, a move which is largely now baked into Microsoft's share price. But this is only the beginning of good things to come, he noted, as it's a major validation of Microsoft's Azure cloud platform.
In the end, we will never know if this was a fair fight, Cramer admitted, as we know that Amazon is best-in-show when it comes to reliability and functionality, and we also know that President Trump is not a fan of Amazon's CEO, Jeff Bezos. However, competition is a good thing in the cloud space and this contract will be not only good for Microsoft, but also for a host of other cloud players, like Oracle (ORCL) - Get Oracle Corporation Report , IBM (IBM) - Get International Business Machines (IBM) Report and VMware (VMW) - Get VMware, Inc. Class A Report .
Returning to Cyclical Stocks
The cyclical stocks have been some of the biggest surprises this quarter, Cramer told viewers, and they might not be done heading higher. Stocks like PPG (PPG) - Get PPG Industries, Inc. Report , Caterpillar (CAT) - Get Caterpillar Inc. Report , Dow Chemical (DOW) - Get Dow, Inc. Report , CSX (CSX) - Get CSX Corporation Report and Union Pacific (UNP) - Get Union Pacific Corporation Report should have been clobbered this quarter, Cramer said, but perhaps things aren't as bad as many had feared.
Cramer said the problem with analysts is that they start with a world view, then cram the stocks that they cover into that world view. This is a problem with the cyclicals, however, as they've all found ways to win despite global headwinds. PPG, for example, did not suffer from a sluggish U.S. auto market, they found strength abroad. Caterpillar benefited from input cost declines, while the railroads found new ways to increase efficiencies.
The world view for many industry pundits has gotten too negative, Cramer explained. China and Brexit and the 2020 elections don't control every company's narrative, he said. Perhaps, some of these worries will even get better. In the meantime, the smart managers at these great companies will continue finding new ways to win and beat expectations.
Searching for Growth and Yield
In his "No-Huddle Offense" segment, Cramer said it's awfully hard to find stocks that offer both growth and yield, but that's exactly what shares of AT&T (T) - Get AT&T Inc. Report and Dow Chemical (DOW) - Get Dow, Inc. Report are offering.
AT&T is now yielding 5.5%, despite a pledge to cease acquisitions so it can pay down debt and focus on cleaning up its act. Meanwhile, Dow Chemical yields 5.6% and is also in turnaround mode. Either stock would make a great addition to your portfolio, Cramer concluded.
In the Lightning Round, Cramer was bullish on Iron Mountain (IRM) - Get Iron Mountain, Inc. (IRM) Report , Wendy's (WEN) - Get Wendy's Company Report , Chicago Mercantile Exchange (CME) - Get CME Group Inc. Class A Report and Mondelez International (MDLZ) - Get Mondelez International, Inc. Class A (MDLZ) Report .
Cramer was bearish on Albemarle (ALB) - Get Albemarle Corporation Report , Realogy Holdings (RLGY) - Get Realogy Holdings Corp. Report , Annaly Capital (NLY) - Get Annaly Capital Management, Inc. Report and Hershey Foods (HSY) - Get Hershey Company (HSY) Report .
On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.
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At the time of publication, Cramer's Action Alerts PLUS had a position in JPM, MSFT, AMZN, CAT.