As Tuesday marked the close of this year's first quarter, Jim Cramer was less than impressed with what he saw this year. He suspects there is one problem that is in the back of investors' minds with every decision they make—and it has now become a big deal.
"Let me say just from the get-go that this market's leaving a sour taste in my mouth. The vast majority of stocks out there just churn. After years where stocks were constantly breaking out to new heights, many stocks now seem trapped," said the "Mad Money" host.
So what changed since the beginning of the year that caused the market to lose its mojo?
To Cramer, the answer is simple. Investors are trapped in an economy that has downshifted, and while the Federal Reserve seems to want to make aggressive decisions—it cannot. The data indicates that it's not worth raising interest rates right now, but then it also shows that the economy is too strong and a raise in interest rates should at least be thought about.
This conundrum is feeding into every investment decision right now. Cramer thinks this explains why the healthcare group is so strong, because that is what you buy when things slow down and you are worried that companies can't beat earnings estimates. Healthcare will perform regardless of what's going on in the world.
Essentially we are treading water right now, with exception of the sectors that will perform well due to the dramatic decline in oil prices.
On the flip side, Cramer sees that the Fed's potential to raise interest rates is impacting the worst performing sector of the quarter: utilities. This is pretty obvious to Cramer, because the utilities always do the best when rates are low. Thus, a raise in rates will hit it hard.
The second worst group is the energy sector, because the estimates for those stocks have become so low that they've fallen through the floor.
So with this tricky conundrum in mind, Cramer named the best and worst performing stocks of the quarter.
"I think they can often tell you more about what's happening than the broader sectors can. That's because in 2015 we've seen subsets of sectors do incredibly well, and others do very badly," Cramer said.
First up for the winners, were stocks that were takeovers; Hospira, being bought by Pfizer, and Kraft which was gobbled up by Heinz. Cramer thinks these were smart acquisitions, as both companies needed to show growth.
Other top performers were Skyworks Solutions, First Solar, Boston Scientific and Urban Outfitters. All of these stocks managed to play last quarter like a champ.
The worst stocks were SanDisk, Ensco and Ralph Lauren. These companies were hit hard with things such as the decline in day rates and overseas exposure.
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What do the winners have in common? Ultimately the choppy first quarter showed that this year will favor those companies that don't rely on economic strength to grow, or rely on increased consumer spending thanks to cheaper gasoline prices.
Cramer suspects that the first quarter's best and worst performers will also be an indication of who the winners will be for the first half of the second quarter.
"So ask yourself, does your portfolio favor the strong or the meek?"
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