Cramer's 'Mad Money' Recap: Signs of a Healthy Market (Final)

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NEW YORK ( TheStreet) -- With the Dow Jones Industrial Average hitting a new high for the year, Jim Cramer donned his doctor's lab coat and told viewers of his "Mad Money" TV show that he was going to take the pulse of the market to see whether it was truly healthy.

The checkup consisted of 10 tests that Cramer said he's been using for years to take the temperature of an illusive market. This is what he saw:

1. A Rally in Transports. Cramer said this is important because the transports represent the movement of goods and people. If the transports are rallying, commerce is picking up, he said.

2. Strength in Banking. Cramer said our economy runs on credit, so a rally in the banking index means that credit conditions are improving.

3. Market Upgrades in Stocks. Cramer said that when Lincoln National ( LNC) received an upgrade today, the stock rallied 4.4%. He said it's a good sign when stocks respond to upgrades.

4. Leadership in Tech. Cramer said he's seeing rallies in all of the bellwether tech names, and they're lifting the whole tech sector.

5. Cash on the Sidelines. Cramer said that with so many investors still with cash in reserve, there's still a lot of money that hasn't hit the markets yet.

6. Strength in Mergers. Cramer said when companies like Massey Energy ( MEE) announce an acquisition, normally that stock would go down. But in a bull market, even the acquiring stock rallies, he said.

7. Strength in Secondary Offerings. Hartford Financial ( HIG) rallied 5% on news of its secondary offering of stock. This is bullish news, he said.

8. Strength in IPOs. Cramer looked at today's IPO of Financial Engine ( FNGN), which closed higher, indicating that even the IPO market is heating up.

9. Market Breadth. Cramer said with so many stocks advancing, and fewer and fewer declining, the market breadth is signaling a healthy market.

10. Skepticism at All-Time Highs. While it may seem counter intuitive, Cramer said the tons of market skeptics are good news, as one by one they'll change their minds, adding fuel to the market's fire.

Cramer said he would be worried if there were danger signs in the market, but he said his 10 checkup tests point to more upside coming.

Drexler's Magical Touch

"Sometimes learning about the stories behind the products matters as much as pouring over balance sheets and earnings estimates," Cramer told viewers. He said sometimes the subjective side of investing is just as important as the analysis.

Such is the case with retailer J. Crew ( JCG). The company reported a blowout quarter last Tuesday, but Cramer said it was even more telling to listen to the company's conference call, and hear 10 of 16 analysts congratulating CEO Mickey Drexler on a terrific quarter.

Cramer said Drexler is a master when it comes to his conference calls. The CEO drove home the point that consumers are more savvy than ever, demanding value and quality, two things that J. Crew is passionate about. Drexler said that J. Crew creates demand that people talk about, and that's how the company constantly connects with its customers.

Cramer noted that J. Crew is "out-producting" its competitors by making lasting products that consumers really love. The company is also making its stores easier to shop at, furthering its brand loyalty. Cramer said J. Crew is also expanding into wedding stores and men's apparel in a big way, with Drexler proclaiming that "the era of expensive men's suits is over."

With the stock of J. Crew up 386% from its lows of 2009, Cramer said J. Crew is most definitely a buy.

Am I Diversified?

Cramer spoke with callers to see if their portfolios have what it takes. The first caller's portfolio included McDonald's ( MCD), AT&T ( T), Johnson & Johnson ( JNJ), Cisco ( CSCO) and Walt Disney ( DIS).

Cramer said "holy cow," this portfolio is perfect.

The second caller's top holdings included Apple ( AAPL), Wells Fargo ( WFC), Vale ( VALE), Exelixis ( EXEL) and Citigroup ( C).

Cramer said this portfolio had two banks and advised selling Wells Fargo in favor of an industrial company.

The third caller had Bank Of America ( BAC), Suntech Power ( STP), RF Micro Devices ( RFMD), Petrobras ( PBR) and Nordic American Tanker ( NAT) as their top five stocks.

Cramer said this portfolio was also well done.

The fourth caller's top stocks were Hi Tech Pharmacal ( HITK), Aflac ( AFL), Plum Creek Timber ( PCL), J.M. Smucker ( SJM) and Exxon Mobil ( XOM).

Cramer also blessed this portfolio as diversified.

Mad Mail

Cramer followed up on NSTAR ( NST), a stock that stumped him in last night's Lightning Round. Cramer blessed the stock, saying that as Massachusetts' largest utility, it has a great dividend yield and should be immune to proposed carbon legislation.

Cramer told another viewer that he'd take some profits in Clean Energy Fuels ( CLNE) and Westport Innovations ( WPRT) after their big runs, but he's still bullish on both companies.

Lightning Round

Cramer was bullish on Prosperity Bancshares ( PRSP), Cree ( CREE), Windstream ( WIN), Tupperware ( TUP), AT&T ( T) and New Alliance Bancshares ( NAL).

He was bearish on Intuitive Surgical ( ISRG), Frontier Communications ( FTR) and Sprint Nextel ( S). -- Written by Scott Rutt in Washington D.C.

To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC .

Want more Cramer? Check out Jim's rules and commandments forinvesting from his latest book by clicking here.

For more of Cramer's insights during the Lightning Round, clickhere .

At the time of publication, Cramer was long Cisco, Apple.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on TheStreet.com. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in TheStreet.com, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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