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What's really going on inside the head of the market? Jim Cramer told his Mad Money viewers Thursday that he was able to perform a Vulcan mind meld with the market today and discovered exactly what it was thinking.
For weeks now the market has been focused primarily on one thing: the price of oil. The thinking goes that if oil is falling there's a lack of demand, which means the economy is slipping into recession. This linkage is so strong, Cramer said, investors can see the correlation for themselves early in the morning. As oil ticks lower, the S&P 500 futures follow seconds later.
So why on a day when oil saw a big rally to just under $30 a barrel were the retail and restaurant stocks also rising, taking the airlines and cruise lines with them? These stocks do better with lower fuel prices, not higher prices.
Cramer concluded that for today at least, the buyers were able to overwhelm the big money managers, snapping up all these beaten-down stocks at terrific prices, recognizing that eventually cheap oil will translate into big profits.
Will the same thing happen again tomorrow? Cramer said his mind-meld was not a crystal ball, so what happens tomorrow is anyone's guess.
Being Negative Can Hurt
It doesn't pay to get too negative, Cramer reminded viewers. In fact, sometimes being negative can actually hurt you.
Case in point: Burlington Stores (BURL) , purveyors of the Burlington Coat Factory retail chain, which saw its shares skyrocket this week after the company pre-announced earnings that were only at the low end of analysts' expectations.
Cramer explained that after the warm winter we've been having, and the gloomy forecasts from other retailers, investors assumed there was no way a store with the word "Coat" in its name could possibly be having a good quarter -- this despite the fact Burlington had a track record of good execution and beating expectations.
But then the winter turned cold and, surprise!, Burlington isn't doing as badly as everyone expected. Shares are now up 2.4% for the year.
Cramer said investors totally overlooked the fact Burlington sells a lot more than just coats, it sells all sorts of apparel, accessories and housewares. More important, Burlington sells value, and value is in demand no matter the weather outside.