Jim Cramer watched as stocks leaped to the best day seen since 2011 on Wednesday, leaving him to wonder—what made Wednesday so much different than Tuesday? When stocks collapse into the close of trading one day, like they did Tuesday, and then hold gains the next day, he has to dig a little deeper to find out what happened.
What Cramer found was a stock phenomenon created at the closing bell on Tuesday that he has not seen since the great recession. He saw the occurrence of accidental high yielders. These are stocks that have fallen so far so fast that their dividends suddenly provide investors with huge yields.
Verizon clocked in at a whopping 5 percent at the bell, along with General Electric and Procter & Gamble at 4 percent. These are all strong balance sheet companies, and the opportunity was too good to pass up for Cramer considering that the 10 year treasury yields just 2 percent.
"I think we've got some substantive things happening that are pretty positive, and some more ethereal, mechanical and even purely emotional factors that could be drivers here," the "Mad Money" host said. (Tweet This)
The first positive thing that Cramer noted was China, which has been the primary reason for the stock market's behavior recently. So while the Chinese stock market did drop more than 1 percent on Tuesday night and Cramer continues to believe it should be avoided, he regarded the Chinese decision to boost liquidity as a positive one. It showed that China might finally be getting its act together.
The second positive occurrence happened in the oil patch. While oil did not go up Wednesday, the largest oil service firm Schlumberger bought Cameron for $14.8 billion in cash and stock. This was a big deal for Cramer, because Schlumberger paid a huge 56 percent premium for Cameron. It wouldn't have made a move like that if it believed that drilling was going away.
Third, there was finally constructive commentary from a significant figure of the Fed. Bill Dudley, president of the Federal Reserve Bank of New York, acknowledged that international events make the case for a rate hike less compelling than it was for him a few weeks ago.
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There was also some leadership among the tech and financials, two of the largest groups in the S&P. Higher long-term rates coupled with lower short rates courtesy of the Fed not tightening, is total nirvana for American banks and the stocks reacted accordingly.
Tech was the real standout of the day, with the return of Cramer's FANG stocks. That group includes Facebook, Amazon, Netflix and Google. Cramer found that the huge move in Google, paired with the comments from Apple that it is doing well in China suggest that tech might not be as bad as many think.
The combination of constructive feedback from the Fed, positives in China and tech, coupled with the fact that stocks are now very inexpensive for the first time in a long time managed to produce the monster one-day bull market rally. It was a welcome break in the dark cloud of negativity that has been looming over the market to let the sun shine, even for a brief moment.