Sometimes all it takes is a scary stock rotation to fuel a rally, Jim Cramer says.
"When money is flowing into stocks, with the mutual funds buying in endless waves and the hedge funds desperate to own stocks rather than shorting them, then you're in the land of the thousand bull dances and you don't have to worry about where the fuel for a rally is going to come from," the "Mad Money" host said.
When no money is flowing into the market, that is when powerful moves in stocks and sectors can occur, Cramer said. This is because when investors are reluctant to invest, money will be pulled out of the least exciting groups of stocks and rotate into sexier names with more lift.
But here is the problem with rotations: without new money flowing in, gains often become zero-sum and will run out of fuel. The leaders will run out of steam with nothing to drive them higher. That is when the worst possible rally can occur — a rally in the wrong stocks.