When a market is led by airlines and oil, Jim Cramer is in heaven.
"It is probably too early to call a turn in the entire group, but I think it is safe to say that the worst is over," the "Mad Money" host said.
Airline stocks have remained very cheap in recent months, as many investors assumed that as the price of oil goes higher, airline margins will shrink. Thus, it is one group that is truly impacted by rising oil prices.
However, Cramer is seeing sudden signs of life again in the group. JetBlue announce price increases, while American Airlines confirmed that it would change its rewards program in July to be one based on customer spending rather than miles.
"That is going to be a lot of income," Cramer said.
At the same time, the dollar is expected to weaken in coming months with the Federal Reserve's possibility of remaining on hold. That will help carriers with large international exposure, namely American, Delta and United Continental. Additionally, the increase in oil prices will actually help airlines that service routes to Texas.
Cramer interpreted the low price to earnings multiple for airline stocks as an indication that investors did not trust that the companies could earn what analysts said they could.
Rate hikes announced by JetBlue indicated to Cramer that the market is in fact strong enough to stop price cutting and not add capacity as it had planned to do.
"That is fantastic news for the market given that old timers like me … value the transports as the best signs of the real strength in the economy," Cramer said.
While there is a chance that JetBlue could roll back fares again, Cramer still thinks the fare increase is a good sign and recommended Southwest, which always seems to make money in an airline price war. Even buying Delta and American Airlines no longer seems like the major risk it was before.