There are powerful trends propelling the stock market higher, Jim Cramer told his Mad Money viewers Tuesday. This pandemic has been horrible for small businesses and our service economy, Cramer said, but many large enterprises remain relatively unscathed, and that's how stocks can still head higher.
Cramer said there were three things that helped the market rally Tuesday. First was the news that the Federal Reserve will begin buying individual corporate bonds, thereby ensuring that companies don't fail. The old saying, "Don't fight the Fed," holds true today and the Fed has unlimited money to keep companies afloat.
The second thing helping to send stocks higher was the news that anti-inflammatory steroid dexamethasone was approved in the U.K. as a promising treatment for the sickest of COVID-19 patients. The more we're able to manage this disease, the easier it will be to get back to normal.
The third positive in the markets today was the 17% surge in retail sales. Cramer said this data point helps propel the notion that the economy can recover quickly. It still may be too soon to tell, but investors should pay attention to the other trading saying, "Don't fight the tape." Investors are clearly lapping up positive news, and it would be foolish to bet against them.
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Executive Decision: McDonald's
In his first "Executive Decision" segment, Cramer spoke with Chris Kempczinski, president and CEO of McDonald's (MCD) - Get Report, the fast food giant that posted strong sales and noted that 95% of their restaurants have now reopened around the globe.
Kempczinski said McDonald's continues to support their franchisees and will use the pandemic as an opportunity to increase efficiency and take market share in every market around the globe.
While 95% of their locations have reopened, only 1,000 in the U.S. currently have dine-in available. Kempczinski said the dine-in experience won't be the same as pre-COVID, given the new rules for social distancing and increased sanitation. That said, drive-thru has been McDonald's great asset. By limiting their menu, they've been able to serve more customers a full 23 seconds faster.
Finally, Kempczinski noted that diversity remains critically important to McDonald's and their suppliers. It's something that touches every aspect of their business and they have many inclusion programs available.
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Executive Decision: Canopy Growth
Klein said that Canopy has all of the pieces in place for years of profitability, including some of the best science in the industry. He said that most consumers don't want a smoking experience, but are open to food and beverage experiences. Canopy has the ability to produce drinks that can taste like anything they want and provide the right amount of buzz with zero calories. He said Canopy's drinks are better than hard seltzers.
When asked about legalization efforts, Klein said that 2022 is the year he predicts cannabis will be legalized in a big way.
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Off the Charts: Costco Wholesale
Collins looked at the daily chart of Costco, noting the stock's 10-day, 20-day and 50-day moving averages. He said that when the 10- and 20-day moving averages cross below the 50-day, that's a bearish sign which has signaled weakness in the past. The stock saw similar patterns in both December and March of this year. This bearish crossover was also apparent in the stock's weekly chart.
That makes this week a make-or-break moment for Costco. If shares end the week higher, it would be a bullish sign, but if the stock closes lower for the week on Friday, that would signal a bearish move ahead. Collins felt investors would be better served by picking other retailers for the remainder of the summer.
In his No-Huddle Offense segment, Cramer pondered what the stock market would look like with a $1 trillion infrastructure package, like the one President Donald Trump is reportedly considering.
While it would be a long shot that such a bill would ever get passed just before an election, Cramer said it could be a boon for Vulcan Materials (VMC) - Get Report and Martin Marietta Materials (MLM) - Get Report. Of the two, Cramer preferred Martin Marietta. He said that U.S. Concrete (USCR) - Get Report has been a serial disappointment and he would not be a buyer. The same with Caterpillar (CAT) - Get Report, which continues to see weakness in its oil and gas business.
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 COST.