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What's Behind the Stock Market's Resilience?

Is the economy getting better or worse?

That was the question on “Mad Money” host Jim Cramer’s mind, as stocks closed out another quiet session with modest losses Tuesday.

Cramer noted that, on one hand, the market received seemingly “bad news” from a few notable companies, including upscale leather goods maker Coach. It paced declines in the consumer discretionary sector after it reported lower-than-expected fourth-quarter sales, hurt by promotion deals it offered North American shoppers.

Investors should have gotten the hint that consumer discretionary spending had slowed when Starbucks reported disappointing earnings last week. The world’s largest coffee chain missed quarterly profit expectations and cut its outlook as visits to its U.S. coffee shops dwindled.

“Taking our cue from Starbucks and Coach may make a ton of sense, but then how the heck do we explain the strength in Whole Foods?” Cramer asked. “All three are expensive. All three can be traded down from. But only Whole Foods seems to have withstood the high-end onslaught and come through with flying colors.”

In Cramer’s opinion, Coach’s problems may have to do with execution. After all, he noted rival Michael Kors has not experienced a similar slowdown. Not to mention PVH, Ralph Lauren, Under Armour and VF Corp have all reported “pretty fabulous numbers” lately, he added.

Cramer thinks Starbucks might be facing increased competition from Dunkin’ Brands, which operates the Dunkin’ Donuts chain. More consumers could gravitate toward Dunkin’ being as its coffee is cheaper than Starbucks, Cramer said.

Adding to the mystery, Cramer pointed out that consumer confidence improved, according to data released Tuesday. July consumer confidence jumped to 65.9 after a reading 62.7 in June, according to The Conference Board, an industry group that maintains an index of consumer attitudes. But the U.S. Commerce Department recently released numbers that showed household purchases had slowed to a one-year low.

“Ironically, the confusion over the strength of the domestic consumer may be precisely what's behind this stock market's resilience,” Cramer said, adding that investors seem to be rotating between defensive and offensive stocks, depending upon what kind of news they’re getting. “It doesn't seem to kill us, but often, quizzically, seems to make the averages stronger.”

—CNBC.com and Reuters contributed to this report

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