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Don’t think the Dow’s minimal gain on Wednesday means the rally is over, Cramer said during Mad Money. There are bullish reasons to believe the market could still go higher.
Technology, oil and the banks led Tuesday’s colossal 379-point move in the Dow, and a second look at them should tell us where we go from here. As long as these three bellwether sectors continue their push forward, the market should follow.
Technology today offered plenty of positive signs. The Nasdaq was up about 2%, even the semiconductors. Apple [AAPL
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] jumped 4.6%, most likely because the new iPod Shuffle announcement. Hewlett-Packard [HPQ
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] actually gained three points since Goldman Sachs removed the stock from its conviction buy list. IBM [IBM
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] recently reported a great quarter. Amazon.com [AMZN
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] and Google [GOOG
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] were up. Buyers showed interest in Google as soon as it dropped below $300.
Oil, on the other hand, was a letdown. High inventory growth pushed down crude prices a full $3, which in turn hurt Exxon Mobil [AAPL
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] and ConocoPhillips [AAPL
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]. At the same time, gold, a classic recession hedge, finished the day higher. We need the exact opposite to happen if we’re going to extend this rally, Cramer said. Crude prices are, after all, a measure of the economy’s strength.
The banks came through in the end, though, with JPMorgan Chase [AAPL
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] CEO Jamie Dimon telling CNBC’s Dennis Kneale that his firm was profitable for January and February, just as Citigroup [AAPL
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] and Wells Fargo [AAPL
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] were. Also, Goldman Sachs upgraded Morgan Stanley [AAPL
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] to a conviction buy. Because Goldman [GS
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] is much like Morgan, Cramer put GS on his own conviction buy list. This continued forward momentum is a great sign for the markets.
Two out of three ain’t bad, right? Here’s what would make the situation better: bank upgrades or earnings revisions, as well as upgrades in tech; strength in oil; and a touch of weakness in the soft-goods stocks. A small dip in these traditional recession plays might mean a less dire economic outlook than people think we’re facing.
If this perfect storm of events were to happen, Cramer said, the markets should continue to provide investors with tradable opportunities. He felt confident enough to recommend buying buys on any pullback in anticipation of that happening.
Cramer's charitable trust owns ConocoPhillips, Goldman Sachs, Hewlett-Packard, JPMorgan Chase, Morgan Stanley and Wells Fargo.
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