Mad Money

Cramer pinpoints three sectors flying high thanks to Washington

Key Points
  • Jim Cramer said Monday's market was a lesson in why investors should buy the dips.
  • The "Mad Money" host said technology, bank and pharmaceutical stocks got a boost from Washington as policymakers took a break from Russia and health care turmoil.
  • The money driving the upticks flowed out of the oil and retail sectors, Cramer said.
3 sectors flying high thanks to Washington

As technology stocks bounced on Monday following several days of selling, Jim Cramer had to address the power of buying when stronger sectors see momentary declines.

"Every time you think they've buried technology stocks, it turns out to be precisely the moment to buy them. Every time you think they've abandoned the growth stocks, no, they're right back there. Every time you've written off the industrials or decided the latest Fed rate hike means nothing to the banks, the money flows right back into the group," the "Mad Money" host said. "The result? A bountiful day ... that allowed us to overlook the continued supermarket carnage in the wake of the Amazon-Whole Foods tie-up."

Cramer started with the bank stocks. The group got two major tailwinds from the Treasury and the Federal Reserve last week in the form of regulatory relief and an interest rate hike.

Cramer said these were undeniable boons to the banks' earnings, as deregulation will help the banks reduce overhead and higher rates mean they can earn more on deposits.

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Cramer pinpoints three sectors flying high thanks to Washington

"I was pretty astonished last week that these stocks traded down when both the Treasury and the Federal Reserve gave them kisses," Cramer said, adding that Bank of America and JPMorgan stood to benefit the most.

As for the tech stocks, Cramer said that President Donald Trump's summit for U.S. technology leaders was essentially a who's who of the market's top-performing names.

Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Microsoft CEO Satya Nadella, Alphabet Chairman Eric Schmidt, and Adobe Systems CEO Shantanu Narayen were all in attendance.

While the group's upticks may have seemed like a happy coincidence, Cramer said the federal government's outdated tech makes room for these titans to help cut costs and upgrade its systems.

The "Mad Money" host said the unison rise in the tech stocks was a prime example of why investors should consider buying on the dips.

The reasons to buy those stocks were just as valid last week as they are now, but the sellers and bears have simply slunk back into the woodwork to make room for the bulls that will pound the table on Tuesday, Cramer said.

Finally, the pharmaceutical and biotechnology stocks also surged, a trend Cramer attributed to a revived Trump campaign promise: slashing drug prices across the board.

"According to Politico, it's likely that Joe Grogan — he's the [Office of Management and Budget]'s director of health programs — is crafting the executive order about pricing. That'd be fabulous news for the drug industry. Why? Because Grogan's previous job was the head of federal affairs for none other than Gilead, which created a hepatitis C cure that costs $80,000. Hard to believe he'll crackdown on high prices for drugs," Cramer said.

The money for this mini-rotation seems to be flowing out of oil and gas names as well as retail, a sector still reeling from Amazon's $13.7 billion bid for high-end grocery chain Whole Foods.

"The bottom line is there's always money that wants to play the trend of the day and today the trend is to buy banks, tech and health care, and all three are getting a boost from Washington. With Russia and health care reform off the table for a day, you can see what happens. These three sectors catch a fabulous bid, the seller walks away and the stocks fly up in unison, and those who brave the negativity walk away all the wealthier," the "Mad Money" host said.

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