The cross-currents of the stock market are so strong Jim Cramer says he can only depend on Michael Phelps to navigate the dangerous riptides to figure out what is going on.
"While the averages might not have told you this today, I am telling you that today was the most bullish day yet in the now fabled post-election Trump rally," the "Mad Money" host said.
Tuesday's market was not only bullish for post-election stocks, but also the pre-election winners took part in the action. This included banks, drug stocks and technology stocks.
However, underlying it all were bonds, which controlled the current of the market.
Interest rates have soared after the election because Trump plans to do some serious spending and big-league tax cuts. That means borrowing money from the bond market in order to fund all of this.
"When you see more money being borrowed, the economy is certainly going to grow faster than it otherwise would. Just as important, though, are the two offshoots of that growth — higher interest rates and inflation," Cramer said.
Higher interest rates are good for the banks, as well as industrials that do well in a growth economy. The same applied to retail, as tax cuts mean more disposable income for consumers.
Investors aren't focused on that, though. Instead, they are worried about the price of money, or interest rates, Cramer said.
The potential for growth could mean a rate hike in December, followed by multiple hikes. The possibility of inflation could occur.
"Now here is the riptide — we don't have enough money coming into this market to keep fueling last week's rally if inflation is going to rage," Cramer said.
As a result, money has rotated out of the big winners like FANG stocks with the belief that inflation will be so great it could erode the earnings power of high-growth companies. However, Cramer said that when looking at a growth stocks, investors must remember the long-term outlook or they will miss the big picture.
That all changed on Tuesday when the bond market came roaring back, and gave Cramer hope that perhaps the worries of inflation were overdone. Social, mobile and fast-growing tech companies all showed strength, too.
"We have to stay close to equities, but a true Olympic swimmer knows that the real tide is the bond market, and today that tide turned bullish for both the post-election stocks and even the pre-election winners, too," Cramer said.