After a big run, we often hear that there's too much optimism in the stock market. Are we there now, given that the S&P 500 hit another new high on Tuesday? Not yet, Jim Cramer told his Mad Money viewers.
Think about it. Is there too much optimism in cyclical stocks, like industrials? Only Honeywell (HON) - Get Honeywell International Inc. (HON) Report and Ingersoll-Rand (IR) - Get Ingersoll-Rand Plc (IR) Report have been doing any good. Aerospace? Just look at how bad Boeing's (BA) - Get Boeing Company Report been. Auto stocks? Don't even get Cramer started there.
Banks like Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report , JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report and Bank of America (BAC) - Get Bank of America Corp Report just revealed a number of big dividend hikes and huge buyback programs. Yet that group still carries a dirt-cheap valuation.
With the exception of four stocks -- Walmart (WMT) - Get Walmart Inc. Report , Home Depot (HD) - Get Home Depot, Inc. (HD) Report , Target (TGT) - Get Target Corporation Report and Costco (COST) - Get Costco Wholesale Corporation Report -- the retail sector remains a disaster. Those four can only thrive because they can buck the trade war pain and Amazon (AMZN) - Get Amazon.com, Inc. Report at the same time.
Healthcare stocks remain under pressure, while investors can't even give away oil stocks at this point. So where does this idea of overvaluation come from?
Cramer acknowledged that the IPO market has been red-hot and there are a few groups within tech that carry rich valuations, like software and cloud stocks. But by and large, the stock market is not as richly valued as many investors seem to think. In fact, there's plenty of skepticism still holding investors back, as we have yet to hit a euphoric point in sentiment.
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Off the Charts: S&P 500
On the show's "Off the Charts" segment, Cramer highlighted the technical analysis work of colleague Carloyn Boroden, who runs FibonacciQueen.com and contributes to RealMoney.
Boroden watches the 5-day exponential moving average and the 13-day exponential moving average in the S&P 500. When the 5-day crosses below the 13-day, it's a sign to be more cautious. When it crosses above the 13-day, it's a sign that more gains could be on the way.
But, like her website name suggests, she also uses Fibonacci levels as well. Regarding the S&P 500, she is bullish over the long term, but believes there could be some short-term pain. So long as the 5-day doesn't cross below the 13-day though, investors may want to buy into that weakness.
That's because she has measured upside targets in the S&P 500 of 3,015, 3,093, 3,102 and potentially even 3,308.
If the 5-day does cross below the 13-day though, investors need to get more cautious.
She also looked at Apple (AAPL) - Get Apple Inc. (AAPL) Report . If the stock can clear the $205 level and if the 5-day can stay above the 13-day moving average, she has upside targets of $227 and $243.
Executive Decision: Green Growth Brands
On the show's "Executive Decision" segment, Cramer talked with Peter Horvath, CEO of Green Growth Brands (GGBXF) . He was also the former COO of Victoria's Secret.
Eight months ago, the company had one shop. Now it has 60 and it's on track to have 240 in the next four months, Horvath explained. The growth in the industry is incredible, and for Green Growth Brands, it wouldn't work without some help.
The company has partnerships with Simon Property Group (SPG) - Get Simon Property Group, Inc. Report and Brookfield Asset Management (BAM) - Get Brookfield Asset Management Inc. Class A Report . These two companies operate some of the best malls in the world, giving Green Growth Brands access to some of the best locations right away. That's why the company's growth has been so good, Horvath said.
Green Growth Brands has been bringing in excellent retail operators who have a knack for store layouts and understand the customer. That's helped to drive sales with locals rather than relying on tourists, as well as increasing the store's sales per square foot.
Finally, Horvath told viewers that the company sells topical CBD products, which is federally legal in the U.S. However, edibles and inhalants are not yet legal under federal law.
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On the show's "No-Huddle Offense" segment, Cramer talked about the market's infatuation with Fintech plays -- even if they're losing money.
While the company is often disliked, investors shouldn't let their emotions stop them from owning the company. The stock has a lot of momentum ever since the company announced its plans for Libra, a digital currency that's attracted 28 partners.
Given its billions of users, there's a ton of potential for Facebook if things fall in its favor, Cramer noted. But remember, it's already on the radar of the regulators and its plans for Libra are, too. That could create issues down the road.
If it works though, it could give a huge boost to the company.
Stocks Likely to Benefit from a Trade Truce
When President Trump met with China's President Xi at the G20 summit, the two took positive steps toward an eventual trade deal. One of those steps included the U.S. rolling back the restrictions on American suppliers to Huawei.
While that gave a big lift to many current suppliers, not all will benefit equally. Cramer explained that the U.S. government will only allow low-tech commodity-like technology, though. High-tech proprietary technology will still be banned.
That means it benefits companies like Skyworks Solutions (SWKS) - Get Skyworks Solutions, Inc. Report , Texas Instruments (TXN) - Get Texas Instruments Incorporated Report , Qorvo (QRVO) - Get Qorvo, Inc. Report and Micron (MU) - Get Micron Technology, Inc. (MU) Report .
However, Micron stock has rallied too much to make it a buy right now, and while Qorvo is good, it's not his top pick. Xilinx (XLNX) - Get Xilinx, Inc. (XLNX) Report is a good company, but not a buy for Cramer, either.
In the end, Skyworks is the biggest winner, Cramer said. One other potential winner? Nvidia (NVDA) - Get NVIDIA Corporation Report . The company isn't really concerned with Huawei, but could be a big beneficiary if Chinese regulators let its acquisition of Mellanox (MLNX) - Get Mellanox Technologies, Ltd. Report go through.
In the Lightning Round, Cramer was bullish on Mastec (MTZ) - Get MasTec, Inc. Report , PepsiCo (PEP) - Get PepsiCo, Inc. Report , Blackstone (BX) - Get Blackstone Group Inc. Class A Report and Cronos Group (CRON) - Get Cronos Group Inc Report .
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At the time of publication, Cramer's Action Alerts PLUS had a position in HON, GS, JPM, HD, AMZN, AAPL, NVDA, FB.