The two streams of money pouring into the market
With the Dow up triple digits, stocks rose substantially on Monday. Jim Cramer went into investigation mode, and discovered that there were two streams of money that poured into the market and took up stocks substantially.
The streams that brought in the big bucks behind Monday's rally were led by news and analysis and asset allocation.
First was the news and analysis stream that woke up stocks from a sleepy Monday. All of the positive storylines propelled stocks that seemed completely out of reach just a few days ago.
There was what Cramer described as a tsunami of bizarre healthcare mergers and acquisitions. For example, Cramer-fave Horizon Pharma used its Irish tax status to acquire Hyperion for $1.1 billion in cash. This will allow Horizon to acquire Hyperion's orphan drug pipeline, which could prove to be very lucrative down the line.
As a result, Horizon's stock was on fire on Monday, which is unusual because they are the acquirer not the target. Cramer interpreted this as the market showing love for the new hybrid model of a larger proprietary drug company adding orphan drugs to its pipeline.
After the Horizon announcement, UnitedHealth Group announced it would snap up Catamaran in order to try to give customers cheaper medications.
"I'm shocked that this takeover target came as cheaply as it did, but Catamaran's shareholders can't be unhappy with this 27 percent premium," Cramer said.
These are just a few of the healthcare deals that set the biotechs and pharma group on fire on Monday. They utilize such a large portion of the market that the downstream implications rippled through the market all over the place. What a difference a week makes; last week they were selling like crazy!
The second stream of money flowing into the market stems from research. Barclays upgraded Analog Devices based on its exposure to Apple's iPhone. Cramer wasn't even sure this was real news, but somehow the stock was up 9 percent.
"If Analog Devices can rally so much on that non-news, then I say go buy some Skyworks. Oops, that's exactly what people did," Cramer added.
Then there was the upgrade from Goldman Sachs of Restoration Hardware. Cramer considers this to be incredible, considering that last week the retailer guided down near-term earnings and guided up longer-term projections. Clearly, Goldman believes in its CEO, Gary Friedman, just as Cramer has for a long time now.
Even Netflix was able to soar Monday on news that Brad Smith, the general counsel of Microsoft, will be joining its board of directors. Cramer considered this a very positive sign for the cult stock. Could Microsoft possibly acquire Netflix?
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"You know how you can tell that there's a torrent of new money trying to get into the market? Simple: despite oil's decline, the oil stocks went up today, a sure sign that we've got mindless money being put to work," Cramer said.
So, after a bearish week in the market, investors welcomed all of the bullish news with open arms and open wallets. Even if the positivity only lasts a day, Cramer relished watching the flow of money reverse and the averages jump for joy as a result.
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