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NEW YORK (TheStreet) -- For once, the late-day rally held into the close, Jim Cramer said on Mad Money Monday. That's good news for the bulls because both growth and value stocks were able to both rally on the same day.
Cramer said there have been many sectors of the market struggling of late. Everything from the high-flying tech and biotech names to the financials, which represent a big part of our economy, have been all been awful for a very long time. But the fortunes for the financials took a turn for the better today, Cramer noted, as not one but two takeover deals were announced.
Takeovers are a very positive sign, Cramer continued -- less competition means higher profits. That's exactly what happened in the airlines and it could happen with the financials as well. The group was also helped along Monday by strong rallies in both Visa (V) and MasterCard (MA), along with an upside surprise from Citigroup (C), which sent shares up 4%.
Cramer said strength was also seen in the oil and gas sector today as Goodrich Petroleum (GDP) spiked 30% on new reserves in Louisiana.
Then there were the high-flyers, the high growth names like Netflix (NFLX), Amazon.com (AMZN) and Twitter (TWTR). Even these names were able to eek out gains today as the bull was able to march all the way to the close of trading.
A Toxic Market
Don't let today's rally lull you into a false sense of security. This market still has a toxic disease that could stop the bull in its tracks.
Cramer said the market has been infected by a plague of new initial public offerings, and it's only just begun. The markets operate on simple laws of supply and demand, Cramer reminded viewers. Too much supply puts pressure on the prices of the whole market.
How much new supply is there? Cramer said there hasn't been this many IPOs since 2001. While a market crash isn't likely this time around, it's still a serious problem.
In the first quarter alone there were 64 new IPOs, representing $10.6 billion worth of investments that didn't flow into existing stocks. Nearly half of those were early-stage biotechs, said Cramer, more than double the number we saw all of last year. The next biggest cluster of new issues: cloud software companies, most of which have been falling in the aftermarket ever since.