Use days like this to buy your favorite reopening stocks into weakness and sell your lockdown stocks into strength, Jim Cramer urged his Mad Money viewers Monday. Why? Because this counter-rotation won't last forever.
Cramer said Monday's halt in the reopening rally was caused by two factors. First was the liquidation of hedge fund Archegos, which was forced to sell $20 billion worth of its assets after defaulting on margin obligations.
Archegos is the poster child of irresponsible, risky investments, but Cramer said he thinks the liquidation won't have any lasting effect on the broader markets.
The second factor affecting stocks was the chilling warning of "impending doom" issued by the director of the CDC. Cramer said the dire warning against reopening our economy too soon put the brakes on the entire reopening trade, at least for now.
Ultimately however, Cramer said he's not making any short term bets on FAANG (Cramer's acronym for Facebook (FB) - Get Report, Apple (AAPL) - Get Report, Amazon (AMZN) - Get Report, Netflix (NFLX) - Get Report and Alphabet (GOOGL) - Get Report or the rest of technology. He told viewers to stick with the reopening stocks like Walt Disney Co. (DIS) - Get Report and Boeing (BA) - Get Report.
Cramer and the AAP team are looking at everything from earnings and politics to the Federal Reserve. Find out what they're telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.
Executive Decision: Inseego
When asked about the declining stock price, Mondor said there are a number of factors at play. He said while it's true that the pandemic-inspired surge in sales has largely abated, current sales are still higher than they were pre-pandemic and Inseego is still on target to meet their goals.
Mondor added that while the company continues to focus on 5G wireless products over the long term, demand for 4G wireless remains strong and his company's cloud subscriptions have grown triple digits over the past year.
As for the semiconductor component shortage, Mondor assured investors that they are working closely with suppliers to manage their supply chain and minimize disruptions.
Cramer said just because a stock goes down, doesn't make it bad.
Executive Decision: Trasimene Acquisition
For his second "Executive Decision" segment, Cramer also spoke with Bill Foley, founder and chairman of Foley Trasimene Acquisition, the SPAC behind the coming PaySafe deal.
Foley said PaySafe is set to begin trading Tuesday and he and his team are very excited for the company's prospects. He said Trasimene does detailed searches to find quality companies that have the right size as well as real revenues, earnings and growth.
Foley's companies at the heart of North American gaming, and he said he has high demands for the management team at PaySafe to grow and expand their gross margins. Foley also plans to reduce the company's leverage, setting them up for success in the digital wallet and payments space.
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.
Don't Kill the Bull
What's the most important story affecting the market? No, it's not imploding hedge funds or the pandemic. It's the glut of new supply that's hitting investors from every angle.
First, there are traditional IPOs. This quarter was the biggest quarter for new public offerings since 2000, with over 100 deals for investors to digest. The more IPOs we see, the lower quality they are, Cramer said, and that's a huge drag on the market.
But IPOs aren't the only problem. We've also seen a record in companies coming public via special purpose acquisition companies, or SPACs. We saw almost 300 SPAC deals this quarter, more than all of 2020.
Adding to IPOs and SPACs are companies performing secondary offerings. Here, too, we're seeing record levels of activities as companies try and take advantage of soaring share prices to raise additional capital. There's also a wave of insider selling as the lockup periods from last year's IPOs are expiring, allowing insiders to finally sell their shares.
The stock market is a market at its core, Cramer reminded viewers. Nothing kills a bull market faster than oversupply.
The Archegos Drama
In his No-Huddle Offense segment, Cramer said the collapse of hedge fund Archegos seemingly came out of nowhere, but it doesn't mean the market is rigged.
Archegos was allowed to borrow an outlandish, and illegal, amount of money, Cramer explained. When one of their positions fell, their entire house of cards collapsed in spectacular fashion. What happened at Archegos is just like what happened in GameStop (GME) - Get Report, only in reverse.
So while today's losses in Viacom CBS (VIAC) , Discovery Communications (DISCA) - Get Report, TenCent Music (TME) - Get Report and Baidu (BIDU) - Get Report were stunning, they also remind us that in a normal market, stocks go down as well as up... and that's a good thing.
Here's what Cramer had to say about some of the stocks that callers offered up during the "Mad Money Lightning Round" Monday evening:
Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.
At the time of publication, Cramer's Action Alerts PLUS had a position in FB, AAPL, AMZN, GOOGL, BA.