Mad Money

Cramer scrutinizes the stock market's winners and losers

Key Points
  • "Mad Money" host Jim Cramer unpacked the dichotomy in the market between struggling sectors like retail and top performers like technology stocks.
  • Bedraggled stocks like Macy's and J.C. Penney look like they could have more pain ahead.
  • Meanwhile, almost all of the bank stocks present stable investments, Cramer said.
The market's winners & losers
The market's winners & losers

In a market that is markedly difficult for retailers and enamored with all things technology, CNBC's Jim Cramer has watched a rift form between winning and losing stocks.

"This is a really Dickensian, 'Tale-of-Two-Cities'-style market," the "Mad Money" host said. "It is at once the best of times if you own the banks and the techs or the industrials, and it's the worst of times if you own the drug stocks, the consumer packaged goods plays or anything retail. This dichotomy plays out every single day."

Cramer pointed to Citi Research's twin downgrades of Macy's and J.C. Penney's stocks to "sell" from neutral ratings. Citi's analysts cited the department store chains' lack of strategic initiatives to differentiate themselves from competing retailers.

The overall negativity in Citi's note made Cramer wonder if the retailers could be subject to "a fate worse than death."

"Citi says that J.C. Penney is withering, that they've cut expenses to the bone — no, through the bone — [and] they need to add the expenses back," Cramer said. "The merchandise is not distinguished, the home goods have lower gross margins. There seems to be no way out."

As for Macy's, Citi said the retailer needs to be able to cut its 8 percent dividend yield, which is the main reason anyone would want to own the stock, Cramer said.

If the department stores are seeing the worst of times, Amazon is seeing the best, the "Mad Money" host contended, citing the e-commerce giant's monster earnings beat.

"It's almost as if Amazon is a country within itself — it's got the best tech, the best selections, the best prices, and the best delivery," Cramer said. "Heck, CEO Jeff Bezos may even have the best space program."

But for Amazon's "haves," there are a fair share of "have-nots," particularly drug companies that have been scrambling in anticipation of the online giant entering the prescription drug space.

Cramer cited CVS, which has been racing to get ahead of Amazon's possible move into pharmaceutical sales via merger talks with health insurer Aetna.

In the meantime, investors have all but declared war on pharma giants Merck, Celgene and Gilead. Market share losses at Merck, slashed guidance at Celgene and a sales slowdown at Gilead contributed to the major declines in their stocks.

In the meantime, internet giant Alphabet, whose Google search platform is at the nexus of so many online purchases, is seeing accelerated volume in ad clicks and core search usage.

"What works in this market works very well, and what doesn't work often is left by the wayside," Cramer said.

Another group that's working is the bank stocks, which Cramer said are so stable (with the exception of Wells Fargo) that it hardly matters who President Donald Trump names the new chairman of the Federal Reserve.

"What can I say? The bottom line is that if you stroll down the wrong aisle of the stock supermarket, you could get eaten by a bear. You get in the right one, like the banks, the techs [or] the industrials, then you're riding the bull," the "Mad Money" host said.

WATCH: Cramer tracks the market's "haves" and "have-nots"

Cramer scrutinizes the stock market's winners and losers
Cramer scrutinizes the stock market's winners and losers

Disclosure: Cramer's charitable trust owns shares of Citigroup and Alphabet.

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