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Oil Rallied the Market, Not Retail

Wall Street’s explanation for Wednesday’s rally was typical, Cramer said during Mad Money. Traders, analysts, the business media, they all just tacked the Dow’s gains onto the most positive news story of the day: good retail sales. But Cramer’s convinced that had nothing to do with it.

How does he know? Because none of the retailers – Best Buy , Kohl’s , J.C. Penney – were higher today. But recession-resistant stocks like Merck and Wyeth were all strong.

Cramer admitted that traders don’t seek out retail stocks after a strong sales number. They’re actually using the number as evidence that the economy's turning up. That’s when cyclical stocks like United Technologies , Parker Hannifin and Emerson Electric are attractive. But the Street’s reasoning was flawed nonetheless.

The real reason for the rally, Cramer said, was the resilience of oil. The commodity just wouldn’t go lower today. And everything spreads out from this sector and companies like Exxon Mobile , Schlumberger and ConocoPhillips .

Oil logically extends to natural gas, the replacement for other fuels in shortage right now. That makes Ultra Petroleum , Apache and XTO Energy buys, Cramer said.

Agriculture, now in the energy sector thanks to ethanol, is under the oil umbrella, too. Cramer likes Deere and Mosaic , but passes on Monsanto and Bunge . Infrastructure stocks like Shaw Group , Chicago Bridge & Iron and Jacobs Engineering get two thumbs up as well.

There’s another type of stock that’s working, and it doesn’t fall into typical sector categorization. It’s high-growth momentum plays, and First Solar’s quarter proved they can work, Cramer said.

“This kind of action won’t last for long,” Cramer said, “but as long as we’re sheltered by the oil umbrella, it will all work.”

Jim's charitable trust owns ConocoPhillips and XTO Energy.

Questions for Cramer? madmoney@cnbc.com

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