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NEW YORK (TheStreet) -- The short-sellers overplayed their hands last week, Jim Cramer told his "Mad Money" TV show viewers Monday after a surprise rally on Wall Street. Cramer said after overdoing things to the downside last week, there was simply no reason to be short the market this week.
Cramer explained that hedge fund managers had a lot to be negative about last week, including momentum stocks like Amazon.com (AMZN) cooling and"frothy" stocks like Plug Power (PLUG) and FuelCell Energy (FCEL) imploding.
Then there were the overseas worries, including the growing crisis in Ukraine and the continued slowdown in China. Cramer said fears are always racheted up when they're from overseas because investors simply cannot know exactly what's going on from moment to moment.
But despite investors expecting the worst from Ukraine over the weekend, they were met instead with a "ho-hum" response when trading began Monday. That's what led to today's rally, said Cramer. The worst was already priced into the markets, meaning up was the only direction left to go.
Know Your IPO
In his "Know Your IPO" segment Cramer highlighted three upcoming cloud IPOs he said should following in the tradition of other red-hot IPOs, like last week's debut of Castlight Health (CSLT), which soared 148%.
Cramer said that Paylocity, which will trading under the ticker "PCTY," is a cloud-based payroll processor taking share from traditional vendors. Paylocity should be trading at six times sales when it comes public, which would put it at a discount to the seven times sales of its peers.
Another exciting deal is Globoforce, which will trade as "THNX." This company provides a cloud-based social network for employees that helps improve morale and lessen churn. Globoforce expects to price between $16 and $18 a share.
Finally, there's Q2 Holdings, which will sport the ticker "QTWO." Cramer said this company offers online banking services to 334 smaller banks and expects to price its shares between $11 and $13 a share.
Cramer said he's not a fan of some other upcoming cloud IPOs, including A10 Networks, Amber Road and BorderFree.
Biotechs on the IPO Trail
Continuing with his IPO theme, Cramer highlighted another coming initial public offering, this time in the red-hot biotech segment. There have been four biotech IPOs since January that have more than doubled, Cramer noted. While this does represent froth in the markets, why not take advantage of it in the short-term while the trend continues?
The company is MediWound, which will trade as "MDWD" when it debuts. Cramer said this Israeli company is developing a drug to remove dead tissue from burn victims, tissue that would have to be surgically removed otherwise. While only in Phase II testing, the drug represents a huge step forward and, thanks to orphan drug status, will have little competition.
MediWound is a tiny deal, pricing between $14 and $16 a share for a valuation of just $306 million. Cramer said he's recommending this as a trade off the IPO and not as a longer-term investment. The company doesn't expect any profits until 2018.
Other biotech IPOs that caught Cramer's eye are Akebia Therapeutics and Versartis, but he remains most excited about MediWound.
Cramer was bearish on Prospect Capital (PSEC).
Does Froth Mean Value?
Yes, there's some froth in the markets, especially in the momentum stocks, Cramer told viewers. But do they still represent value? Cramer looked at three high-flying momentum names to find out.
First up is GT Advanced Technology (GTAT), a stock up more than 500% over the past year. The company makes equipment for the solar and sapphire industries and is up big on a partnership with Apple (AAPL), a stock Cramer owns for his charitable trust, Action Alerts PLUS, to supply sapphire for the iPhone and other products. Cramer said he'd consider buying some GT Advanced Technology on a pullback.
Next is SunEdison (SUNE), a stock that's tripled in the past 12 months. It supplies wafers for the solar and semiconductor industries. Cramer said this company is committed to bringing out value by spinning off its solar division and creating a yield-generating entity that's a brilliant corporate finance maneuver. He's be a buyer of this new-yield company.
Finally, there's Incyte (INCY), the biotech up 180% over the past year. With sales up 73% from last year and lots of new, exciting drugs in the pipeline, Cramer said this stock is also a buy, buy, buy on the next market pullback.
No Huddle Offense
In his "No Huddle Offense" segment, Cramer sounded off against the Wall Street analysts now abandoning offshore drillers like Ensco (ESV) in favor of the onshore counterparts.
Cramer said Ensco, Transocean (RIG) and Seadrill (SDRL) have all been beaten up mercilessly and now offer huge dividend yields. Yet, at a time when they should be bought, the analysts are abandoning them.
What are the analysts excited about? The onshore drillers with the momentum at their backs. But Cramer said the problem is, these stocks have already run up big, making them sell, sell, sells in his book.
Where were these analysts when the onshore stocks were lower and the offshore stocks were higher, Cramer asked? Just another example of the Wall Street machine being late to the party, giving investors the opposite advice they should be. The name of the game is still buy low, sell high, after all.
To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.
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-- Written by Scott Rutt in Washington, D.C.
To email Scott about this article, click here: Scott Rutt