Mad Money

Cyclical stocks are driving the market to new highs while momentum plays like Tesla and Zoom are stalling, Cramer says

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Key Points
  • CNBC's Jim Cramer said the stock market is divided between old investors buying cyclical stocks and young investors holding on to last year's high-flying momentum stocks.
  • "The house of pleasure has walls made of traditional stocks that hold up under scrutiny, but the house of pain has been falling apart," the "Mad Money" host said.

In this article

VIDEO2:3002:30
Jim Cramer: What young investors are getting wrong about the market

The same high-flying stocks that drew investors to the stock market last year have left the newcomers out in the cold, CNBC's Jim Cramer said Monday.

"The house of pleasure has walls made of traditional stocks that hold up under scrutiny, but the house of pain has been falling apart," the "Mad Money" host said.

Cyclical stocks that are levered to the broader economy have caught fire and driven the stock market to new highs, Cramer said. He pointed to stocks like Emerson Electric, Ingersoll Rand, Honeywell, PPG, Home Depot, Lowe's, JP Morgan Chase and Wells Fargo.

Each of these stocks, minus Honeywell, has outgained the market year to date. Wells Fargo, up 45%, has been the strongest performer of the bunch.

"Then you have the second market, the one that's dominated by the younger cohort that's been drawn in by no-commission trading, an easy-to-use Robinhood app, and some very exciting stocks that made people" fortunes last year, Cramer said.

Tesla and Zoom shares have struggled to keep momentum after putting up eye-popping numbers in 2020. Zoom is down more than 8% this year and 45% from its peak in October. Tesla shares are up just 1% since the start of the year. The stock last traded at $714.63, down about 21% from late January.

Cramer also said many SPAC plays are included in the "house of pain." Some of those include QuantumScape, Nikola and Lordstown Motors, which have seen shares decline between 32% and 63% this year.

VIDEO9:0309:03
Jim Cramer: The house of pain versus the house of pleasure

Disclosure: Cramer's charitable trust owns shares of Honeywell.

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