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Cramer discovers a massive rotation of money, primed to explode stocks higher

Jim Cramer has witnessed institutional investors suddenly pouring money into groups that have stalled and been neglected.

These very big sectors have suddenly come alive, and he says it could mean good things for the stock market.

"The banks, the oil service companies and the airlines. All groups that the market had given up on for the last year, all inching back, all primed to explode higher if just a few more things go well," the "Mad Money" host said.

Banks account for a large portion of the S&P 500, yet their performance has lagged the S&P dramatically this year as investors wait for the Federal Reserve to raise interest rates. When interest rates go higher, banks make more money because they collect higher rates from customer deposits.





Money and magnify glass
Mark Wilson | Getty Images

Somehow the banks managed to rally nicely on Thursday, despite the fact that the focus was not on the Fed. When Cramer sees giant IPOs like ZTO Express — a Chinese logistics company that came public on Thursday — he thinks that could bode well for banks.

Initial public offerings have been few and far between this year. The lack of IPOs has hurt, as it is a lucrative business for equity sales and corporate finance brokers. Cramer thinks that could change this quarter.

Meanwhile, the recent mergers also bode well for banks, as has the loan growth seen at companies like Bank of America and JPMorgan. That signals that gross margins could be climbing.

"When you see the wild trading in currencies that we have experienced lately, coupled with all the bond activity … you have to start thinking that maybe the Brexit induced turmoil that brought such rich trading fees might not be so one time only," Cramer said.

Oil service stocks have seen a similar rotation, too. As soon as crude hit $50, domestic drilling was revived in the U.S., Cramer said. That is how stocks like Halliburton and Baker Hughes have done so well.

Finally, Cramer added that the airline stocks are back. Southwest had fairly downbeat commentary about the current environment, yet many of the stocks in the group barely winced. Some even went higher.

Ultimately, these large sectors could finally show signs of life again, a very welcome sign after getting beaten down for most of the year.

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