Cramer: Market’s Leaders Carry All Stocks

Stocks are headed higher, even those that don’t deserve to, thanks to leadership from oil, technology and the banks, Cramer said Thursday. These generals of the market, as he called them, carry so much weight they’re changing market sentiment, turning bears into bulls and boosting share prices across the board.

Just look at FedEx . The company reported a 75% decline in third-quarter profits today, but still the stock finished up almost 5%. Despite a list of negatives rattled off by CEO Frederick Smith, Wall Street latched onto just these few words: “We do believe that we’ve probably seen the worst.” Apparently, the market was down for so long that traders are blocking out everything but the positives.

That’s because oil, tech and the banks give them hope. The turn from being the worst sectors to the strongest is creating that virtuous circle Cramer often mentions, where good news begets more good news. We need that to keep this rally going. Sure, the Dow dropped 86 points on Thursday, but this market troika has put a floor in that should keep us from returning to Dow 6,400.

Look at oil. Rising crude prices are benefiting more than just big firms like Chevron and BP. Oil services plays like Transocean are up as well. So, too, is alternative energy. First Solar jumped 5% today. And oil’s strength has rippled into all commodities, infrastructure and machinery. Just like FedEx, steelmaker Nucor added 7% to its share price on Thursday, and that’s after changing its first-quarter guidance earlier in the week from a profit to a loss.

In tech, Oracle’s great earnings jolted both Microsoft and Corning’s positive guidance is also good news for Dell, Hewlett-Packard, Best Buy, Sandisk, Cisco Systems, Altera and Xilinx, all of which have exposure to GLW’s products. Even Nokia was upgraded. So the cell-phone industry might to some extent be rebounding.

As for the banks, they did decline today on some profit taking. Though after a 50% move in just a week, Cramer said that’s to be expected. The financials are always at the heart of any recovery, and that’s why the market as a whole has followed them higher. We need this continued strength to make this recent rally legit. Another noteworthy point, is that short sellers are no longer able to raid this sector. And hedge funds are switching their positions from short to long, and that new buying should be a real boon to all stocks.

These three generals are the market’s leaders, Cramer said. Now analysts, money managers and even retailer investors are all starting to fall in behind them.

Cramer's charitable trust owns BP, Chevron, Cisco Systems and Hewlett-Packard.

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