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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.
Investors must remember that not only are the IPOs themselves a problem, but each of these deals usually creates secondary offerings and a wave of insider selling once the lockup periods expire. Making matters worse, there are still 122 IPOs waiting in the wings, which are looking to raise another $32.3 billion.
Juicy Breakup Plays
In a volatile market, there's still one tried and true way to create value, Cramer once again told viewers -- breaking up your company. He offered up three more juicy breakup plays: Baxter International (BAX), H&R Block (HRB) and Automatic Data Processing (ADP).
Cramer reminded viewers that Wall Street loves bite-sized companies. They're easier to value, easily to analyze and are more likely to catch a takeover bid.
That's why Baxter is Cramer's number one breakup story at the moment as the company is separating its slow-growing medical supply business such as syringes and IV delivery pumps from its fast-growing biosciences business, which will garner a much higher multiple as an independent entity. Cramer said by just breaking into two Baxter could fetch 20% more than it trades for today.
H&R Block is also in breakup mode, selling its banking business, a deal expected to close in September. Cramer said the banking unit has been a headache for years, exposing H&R Block to increased regulations for synergies that never materialized.
Finally, there's ADP, which is spinning off its dealer services unit for $700 million. Cramer said this spinoff not only makes ADP a pure-play payroll processor, but the infusion of cash will allow it to significantly increase its share buyback program.
For the next installment of "Cramer's Playbook," Cramer answered the question of whether investors should still open an individual retirement account if their company offers a 401(k) plan.
Cramer said while 401(k)s area great way to save for retirement, they're far from ideal given the limited investment options and their sometimes high fees. That's why the best way to save is with an individual IRA, where investors can be in complete control of a portfolio that ideally has five to 10 hand-picked stocks.
Getting one's money into an IRA can be difficult, however, as current rules allow for three times as much money to be put into a 401(k) annually than in an IRA.
There is one time when it's easy to get money into an IRA, Cramer continued, and that's, unfortunately, when you lose your job. The silver lining of that situation, however, is you can roll over your 401(k) into an IRA without penalty. Cramer recommended a trustee-to-trustee rollover as the easiest way to get your retirement savings into its ideal location.
No Huddle Offense
In his "No Huddle Offense" segment Cramer said he's seeing some signs of stability in this market. One of those signs was the cooling of the IPO market, with four deals pulled last Friday. Cramer said after the huge disappointments that were La Quinta (LQ) and Ally Financial (ALLY), he can only hope more deals decide to postpone their offerings.
The second sign of stability was a statement by Twitter execs that they have no intention of selling their shares at current prices. Cramer said the market needs a lot more of the "anti-selling" statements to reassure investors they won't be crushed in a coming wave of insider selling.
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