Mad Money

8 signs that the market's healthy enough to invest

Cramer: Market healthy or sick?

Is the market a sick patient right now, or healthy enough to invest? Jim Cramer has his own way of taking the pulse of the market, and has calculated that it's actually remarkably healthy.

The "Mad Money" host defines as healthy market as one that gives investors a chance to participate, and that's just what it is doing. To help investors spot the opportunity, here are Cramer's eight signs that the market is healthy enough to invest in:

Supporters of opposition leader and head of radical leftist Syriza party Alexis Tsipras cheer at exit poll results in Athens, January 25, 2015.
Yannis Behrakis | Reuters

No. 1 Overseas worries: Things were looking pretty dire on Sunday evening with overseas worry on Greek elections. However, sure enough by the time the market opened it reversed its judgment. Investors were willing to rethink whether Greek elections or Russian worries are relevant.

No. 2 Analyst downgrades: When an analyst downgrades a stock and the market doesn't even blink, then Cramer knows it is in a healthy spot. Such was the case with Dollar General on Monday when it was downgraded and the stock barely took a hit.

No. 3 Stock amnesia: Friday marked the day of the horrendous earnings report from McDonald's. The stock took a hit, but then came bouncing right back on Monday.

"They have a very lackadaisical sense of urgency, which, while an oxymoron, does seem to fit the bill," said Cramer.

No. 4 Love of supply: When a company offers stock and the price it is offered at gets crushed, that's bad news. Orphan drug maker BioMarin Pharmaceuticals had an offering for 8.5 million shares at $93.25, and the stock has now rallied up to $99. That is some terrific momentum.

No. 5 Acquisitions are back: On Monday morning, Rock-Tenn acquired MeadWestVaco for $9.2 billion. Additionally, Energy Transfer Partners acquired Regency Energy for $18 billion, so that it could build out the energy pipeline network. This shows it is taking advantage of the stress in the oil patch right now, a good sign.

No. 6 Multi-day moves: When a stock continues to have movement for several days, instead of being a one-hit wonder then Cramer knows the market is healthy. For example, Netflix is still on fire after it reported terrific numbers last week.

No. 7 Positive earnings: The market is seeing one positive earnings being reported by each sector. D.R. Horton delivered fabulous numbers and the stock rose nicely. That's a good sign from the largest homebuilder in the country.

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No. 8 Healthy IPO market: When the IPO market is alive and kicking, Cramer knows it's time to invest. He took a lot of heat for recommending the Box IPO last week, but sure enough it was a great deal.

"My only regret is not being even more bullish than I was because Box was a total homerun. That's what happens in a real good market," said the "Mad Money" host.

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