Cramer's Ways to Win In This Market
From shorts getting squeezed to initial public offerings and takeovers resulting in shares of both the target and the acquirer going higher, Cramer on Tuesday said there are many opportunities to make money in this bull market.
Texas Instruments said Monday it would buy National Semiconductor at a massive premium. Not surprisingly, Cramer noted National's stock soared by more than 70 percent on Tuesday. Texas Instruments' stock, however, also rose. Despite having paid a premium of nearly 80 percent for National Semi, Texas Instruments saw shares close up 58 cents. Cramer couldn't believe it.
In another mergers and acquisitions announcement, Diamond Foods said Tuesday it plans to purchase the Pringles brand from Procter & Gamble . Cramer said Diamond is one of the most heavily shorted stocks, but the $1.5 billion deal sent the short-sellers scrambling. Diamond's stock pushed higher on the deal, too.
"I've gotta tell you, the reaction to these deals is just plain monster bullish," Cramer said. "These rallies are all about perception—the managements are believed, the skeptics are overrun and the joy is in air."
Meanwhile, Apple shares were expected to get crushed by the rebalancing of the Nasdaq 100. Instead of the stock taking a hit, investors came in and bought it.
The shorts are getting squeezed in names like Chipotle Mexican Grill , Lululemon and Netfilx . These stocks flirted with highs on Tuesday and continue to push higher on little news, Cramer said. He thinks the shorts are getting scared by new money that's come into the market. People who got out of equities are coming back to participate in the bull market. Shorts are also getting squeezed in tech, especially in light of the Texas Instruments-National Semi deal.
In addition, Cramer noted that 33 IPOs have priced this year with an average return of roughly 22 percent.
"In a great bull market like this one," Cramer said. "There are always many ways to win and win huge."
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