On Monday momentum stocks bounced with bulls sweeping in and buying the group broadly.
Jim Cramer thinks the price action could be telling; especially with a bellwether catalyst coming in the days ahead.
Part of the turn, Cramer says, has to do with the depth of the decline in momentum stocks over the last 3 months. Although they continue to trade at high multiples, many are significantly cheaper than they were in the winter months.
And on Wall Street price is a relative matter.
"For example, when I see Yelp fall from $101 to the low $50s, I know that stock is being put on sale. Sure I realize I still have to pay a premium and accept the multiple, but it's nowhere near the premium I would have paid just a few months ago," Cramer said.
Therefore, Cramer thinks money managers, who specialize in growth, just couldn't resist the relative bargain.
Then, other bullish catalysts came into play including fear of a short-covering rally, a decline in IPOs and a technical pattern which suggests these stocks are at a point of inflection.
All told, on Monday, momentum stocks had every reason to rally.
The question, however, becomes is the turn sustainable? Or is it a temporary bounce in a bigger move lower?