Investors have begun taking sides, Jim Cramer told his Mad Money viewers Thursday, and one of those sides has to be wrong. Cramer said the buyers are becoming complacent, and that means some of them are about to get hurt.
For the past several years, money had been migrating out of stocks in favor of bonds, Cramer explained. That's why on most days, when one sector wins, others have to lose. There simply isn't enough money to take everything higher. That was, until today.
Thursday, we saw strength across the board, as some investors became hopeful a trade deal is near, while others continued to buy stocks that aren't tied to trade. Some investors bought JPMorgan Chase (JPM) - Get JPMorgan Chase & Co. Report and Bank of America (BAC) - Get Bank of America Corp Report on hopes the economy is improving, while others bought Mastercard (MA) - Get Mastercard Incorporated Class A Report and Visa (V) - Get Visa Inc. Class A Report , as a hedge against a slowing economy. The retail stocks rallied alongside consumer packaged goods, and old tech and new tech were both higher at the close.
Only one side can be right, Cramer reminded viewers. He was not hopeful for a quick resolution to the trade war and saw no signs the economy is improving enough to make Bank of America or JPMorgan a buy. He was also leery of both the retail and the consumer packaged goods stocks as they've both gotten too expensive this quarter.
As for the battle between old tech and new tech, Cramer said the cloud stocks have been getting clobbered and may soon be a buy, but old tech needs a resolution to the trade war that isn't likely to happen anytime soon.
Executive Decision: CloudStrike
For his "Executive Decision" segment, Cramer sat down with George Kurtz, CEO of CloudStrike (CRWD) - Get CrowdStrike Holdings, Inc. Class A Report , the red-hot cybersecurity company that peaked at $101 a share before falling out of favor on Wall Street. Shares of CrowdStrike have fallen 19% in just the past week.
Kurtz said CrowdStrike is redefining cybersecurity in the cloud, using crowdsourcing and artificial intelligence to detect threats and prevent costly data breaches. He said his company partners with Amazon's (AMZN) - Get Amazon.com, Inc. Report Web Services and is the leader in its space with lots of forward momentum.
Kurtz added that CrowdStrike has not been having any difficultly closing bigger deals, as some of their peers have reported. In fact, as breaches continue to be in the public eye, CrowdStrike's sales cycle gets shorter. That's how the company has been able to deliver 104% year-over-year revenue growth.
When asked about the threat of increased competition in the cybersecurity space, Kurtz said CrowdStrike has the best solution and other vendors can't adapt quickly to do what they do.
On Real Money, Cramer says the Chinese need to show a little goodwill. Get more of his insights with a free trial subscription to Real Money.
The S&P Oscillator
Thursday was a decent day for stocks, Cramer told viewers. There isn't a lot of earnings news, there was nothing meaningful happening in the trade war and no significant economic data to spur the Federal Reserve. So why then was Cramer worried?
Cramer said for decades, he's been taking his cues from the proprietary S&P short-term oscillator, a measure of whether the markets are overbought or oversold. With years of experience, he's learned that a reading of +5 means sell, while a reading of -5 means buy. Thursday's reading was +8.
Stocks have simply moved too far, too fast, Cramer said, and his discipline says to lighten up and take profits. For individual investors, the price at which you buy a stock matters. That makes buying at these levels dangerous, even if you can't see where the next big correction might be coming from.
Don't risk being blindsided, Cramer cautioned, take some profits and be ready to buy when the next sell off hits.
Cramer and the AAP team are raising cash in preparation for a pullback. 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.
Off the Tape: Everlane
In his "Off The Tape" segment, Cramer sat down with Michael Preysman, founder and CEO of the privately-held Everlane, the online apparel brand that's all about radical transparency and sustainability.
Preysman said Everlane starts with their values and their products serve those values. Being sustainable is the future, he said. That's why Everlane is focused on using less plastic and water and cares about every aspect of their supply chain. All throughout their new stores, you'll find stories to educate you on the importance of everything that matters most to Everlane.
When asked about tariffs and trade, Preysman said he understands the need to balance world trade, but it's impractical to expect companies to respond to demands in just a few months. Everlane is already moving products out of China, but it will take time.
Turning to the topic of the fickle fashion industry, Preysman said that Everlane chooses to stick with basics, t-shirts, pants and shoes that you can wear for years, rather than trendy fashions that change with the seasons.
Am I Diversified?
In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.
The first portfolio included Salesforce.com (CRM) - Get salesforce.com, inc. Report , UnitedHealth (UNH) - Get UnitedHealth Group Incorporated Report , Nvidia (NVDA) - Get NVIDIA Corporation Report , Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report and Walt Disney (DIS) - Get Walt Disney Company Report .
Cramer said Salesforce trades with Nvidia, which makes this portfolio not diversified.
The second portfolio's top holdings included BP (BP) - Get BP Plc Report , AT&T (T) - Get AT&T Inc. Report , Cedar Fair (FUN) - Get Cedar Fair, L.P. Report , PPL (PPL) - Get PPL Corporation Report and Target (TGT) - Get Target Corporation Report .
Cramer said he liked this portfolio for its yield and that it was perfectly diversified.
Cramer said this portfolio was diversified, but he was not a fan of Kraft-Heinz.
The final portfolio's top stocks were Berkshire Hathaway (BRK.B) - Get Berkshire Hathaway Inc. Class B Report , Amazon, Johnson & Johnson (JNJ) - Get Johnson & Johnson Report , Disney, and Waste Management (WM) - Get Waste Management, Inc. Report .
Cramer said this portfolio as diversified.
In the Lightning Round, Cramer was bullish on Forescout Technologies (FSCT) - Get ForeScout Technologies, Inc. Report , Arrow Electronics (ARW) - Get Arrow Electronics, Inc. Report , and Acadia Pharmaceuticals (ACAD) - Get ACADIA Pharmaceuticals Inc. Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in JPM, MA, AMZN CRM, UNH, NVDA, GS, DIS, BP, JNJ.