"Stay focused," Jim Cramer told his Mad Money viewers Tuesday. There are many competing factions in the stock market, and who wins and loses can change on a whim. Not everything can go up at the same time, Cramer said, which is why investors must stay vigilant.
It's not always easy to spot the rotations driving this market. But Cramer says he likes to use a "sore thumb index" where the winning stocks "stick out like a sore thumb."
Among the stand-out stocks on Tuesday were several recession names, including spice maker McCormick (MKC.V) - Get Report, Clorox (CLX) - Get Report, and Johnson & Johnson (JNJ) - Get Report. Investors had taken profits in these names just a few weeks ago, Cramer said, but now they're back in style. Also notable were the stock of Mastercard (MA) - Get Report and the IPO of Ncino NCNO, two financial companies that investors chose over banks, which are struggling to deliver on earnings.
Finally, Cramer called out the stocks of Walmart (WMT) - Get Report and Costco (COST) - Get Report, both of which rallied into the close. He said the group of investors who fear another lockdown are bidding up these retailers, but with positive vaccine data out of Moderna (MRNA) - Get Report this evening, all of today's gains could be quickly erased by tomorrow's news.
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Executive Decision: Livongo Health
In his first "Executive Decision" segment, Cramer spoke with Glen Tullman, founder and executive chairman of Livongo Health (LVGO) - Get Report, the health technology platform with shares up 68% in just the past month.
Tullman said now more than ever, it's important for patients with preexisting conditions to have more information and more choices when it comes to their health. Livongo believes in consumer-directed health options and makes it easier than ever for patients to manage their own care.
This is especially important during COVID-19, Tullman said, because 78% of all ICU admissions and 90% of all COVID-19 deaths stem from pre-existing conditions. So those with diabetes and hypertension are best left at home and not crowding doctors' offices where they risk infection.
Livongo is taking the industry by storm and not just with large companies. The company now has over seven million federal government workers enrolled in their programs.
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Executive Decision: Paychex
For his second "Executive Decision" segment, Cramer also checked in with Marty Mucci, president and CEO of Paychex (PAYX) - Get Report, a company with its finger on the pulse of our small business economy.
Mucci said Paychex ended the year strong with revenue growth of 7% and operating margins over 35%. The payroll processor and human resources company has $1 billion in cash on its books and remains committed to its dividend which currently yields 3.5%.
Mucci said Paychex hasn't seen much fallout from the recent surge in COVID-19 cases. He said the tide turned positive in May and things have been "looking up" since then with more checks being processed with every pay cycle. He noted that new business formation is still happening and people are using this time to start new businesses.
Paychex has also been instrumental in helping small businesses take advantage of government assistance. Mucci said they make applying for PPP and other programs as easy as possible for companies in need.
Cramer said he stands by Paychex, despite an analyst downgrade today.
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Off the Charts
In the "Off The Charts" segment, Cramer checked in with colleague Larry Williams to see where the markets are likely to head next, based on technical analysis.
Williams first looked at the seasonal patterns of the market, noting that July tends to be a bullish month for stocks. This pattern was confirmed when he looked at a daily chart of the e-mini S&P 500 futures, paying particular attention to the advance/decline line, which tends to be a leading indicator. Based on these technicals, Williams saw two weeks of strength left in the market before the rally runs out of steam. He felt another 5% to 6% of upside was possible before the markets roll over.
Cramer agreed with Williams' analysis, noting that this timing coincides with the expiration of unemployment benefits for many workers who are out of work.
Rethink Those Once-Great Companies
In his "No-Huddle Offense" segment, Cramer said stock picking shouldn't become a history lesson. Not all once-great companies are destined for greatness again. That was Cramer's take after looking at Robintrack.net, a service that highlights the most popular stocks trading on Robinhood, the trading platform that is very popular with younger investors.
Among the hot stocks on Robinhood right now are names like Tesla (TSLA) - Get Report and a speculative sports betting platform called Everi Holding (EVRI) - Get Report. Cramer said he doesn't think Everi is that bad, for speculation, even with the stock recently plunging to lows of just $1.55 a share.
Instead, what had Cramer concerned were a different group of stocks, names like Ford (F) - Get Report, General Electric (GE) - Get Report and American Airlines (AAL) - Get Report. Cramer said all of these names are cheap, but they deserve to be. Ford has $150 billion in debt. GE is a fallen angel with huge aerospace exposure. And American Airlines is by far the best among its peers. Stocks that fall into the single digits often deserve to trade there, Cramer concluded, and just because they were once great doesn't mean they will be again.
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 CLX, MKC, JNJ, MA, COST.