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Some stocks have moved too far, too fast while others have slid too far in the other direction, Jim Cramer told his Mad Money viewers Thursday, as he described his plan for trading a bifurcated stock market.
Cramer said that before the election, investors were betting on a Hillary Clinton win, but when Trump surprised everyone, those trades quickly reversed, sending the industrials and the banks higher, while tech sank.
But once investors realized that a Trump presidency would be a pro-business and pro-growth presidency, new money began flowing into the markets, sending everything higher.
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Now, the new money has exhausted itself -- at least for the moment. That means that for the winners to rise, the losers must fall. Many of the moves were just too aggressive and not sustainable, Cramer said. It's natural to see investors take a pause.
Cramer said he's now looking to buy some of the stocks that are being thrown away, because -- over time -- a pro-growth administration will lead to higher earnings for everyone.
Don't get too skeptical, Cramer concluded. Give it some time and be prepared to ride the next rotation higher.
Coming up on tonight's episode: Cramer interviews Bob Sulentic, CEO of CBRE Group (CBG) and Stanley Bergman, CEO of Henry Schein (HSIC) - Get Report . Plus, the importance of diversity in the biotech sector, and don't miss the Lightning Round: Which stocks is Cramer bullish on?
Executive Decision: CBRE Group
For his "Executive Decision" segment, Cramer sat down with Bob Sulentic, CEO of CBRE Group (CBG) , the commercial real estate services company with shares down 15% for 2016, trading at 12.5 times earnings.
Sulentic said that despite his company's share price being down, earnings for the year are up 10%. After many fears surrounding Brexit, he said that the U.K. market has stabilized, while continental Europe is seeing occupancy and rental rates on the rise.
Europe has also not seen a lot of new development, Sulentic added, creating a slow but steady real estate market that is very healthy.
When asked about the domestic market, Sulentic said he's optimistic because lower tax rates, increased infrastructure spending and less regulation would all be net positives for CBRE and its customers' businesses.
Cramer said the stock of CBRE is down a lot more than in should be.
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Nvidia shares popped 30% after it reported a monster quarter last month and are up over 165% for the year. But in the past few days, the stock has been getting pruned as fund managers redeploy their gains into the industrials and other stocks expected to be winners in the Trump administration.
Cramer said Nvidia is precisely the type of stock he's looking for: one that's got great growth but has fallen out of favor. He suggested starting with a small position and buying more on the way down.
Caterpillar, on the other hand, is up 40% for the year and is at 52-week highs. Cramer said Cat has gotten too hot and he can't recommend it at current levels. If you own it, Cramer suggested selling it in intervals as it goes higher, and picking up some Nvidia as that stock heads lower.
Executive Decision: Henry Schein
For his second "Executive Decision" segment, Cramer once again welcomed Stanley Bergman, chairman and CEO of Henry Schein (HSIC) - Get Report , the dental, vaccine and pet-care supplier with shares that are down 5% for the year.
Bergman said that health-care stocks are not in fashion on Wall Street right now, but Henry Schein remains a consistent earner with growth, and they continue to buy back stock and return cash to shareholders.
The pet economy remains strong, Bergman said, with eastern Europe being particularly good. The company's vaccine business also continues to grow and Henry Schein is making acquisitions in the dental-supply market to increase its share.
Cramer said the Trump rally may not include health-care at the moment, but every one of Henry Schein's product lines is doing well.
If you plan on investing in an early-stage biotech company that's pushing the frontiers of science -- beware, Cramer told viewers, as bad news from one company can be bad news for everyone.
Cramer said he understands the allure of owning immunotherapy stocks like Bluebird Bio (BLUE) - Get Report , which soared 14% today on positive Phase I data. After all, these companies aim to treat cancer with your body's own immune system.
But investors must be aware of the highly speculative nature of early-stage biotechs.
When Juno Therapeutics (JUNO) suspended its clinical trial after two patients died, not only did the entire immunotherapy group suffer huge losses, the results called into question whether the science could deliver on its promises.
There are a multitude of early stage companies working on amazing things, Cramer said, but good news from one company not only affects that one company, bad news can send everyone into a tailspin. That's simply not a great risk/reward situation in an already fickle market.
Action Alerts PLUS: Cramer and Jack Mohr are trimming Occidental (OXY) - Get Report a bit, and adding shares of Adobe (ADBE) - Get Report . Find out what they are telling their members with a free subscription to their investment club.
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At the time of publication, Cramer's Action Alerts PLUS had positions in KHC, OXY, ADBE and NWL.