Cramer: This Market Is Making Strange Bedfellows

 | Jan 11, 2018 | 5:12 PM EST
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Oil and airlines don't mix. Unless they are being traded in this incredible market. I keep highlighting odd ways that stocks are trading, oddly bullish ways, and sometimes they are right in your face like this simultaneous move in oil and air. It's the type of thing that can be a major theme on a given day that can really get the animal spirits roaring.

Consider that the stocks of the major airlines are strong because of a terrific set of numbers out of Delta (DAL) . The top and bottom lines were huge and buyers came out of the woodworks. Why not: the airline stocks have gone from being the most expensive in the market because of their periodic losses to being the cheapest group in the market other than the autos simply because investors think that competition has returned and margins are going to get slashed. That's not what Delta told you today though. They directly debunked the notion that the fare wars are continuing and said they will hold the line on willy-nilly fleet expansion. Hence why you always hear that you are on an extremely full flight and you pay through the nose for any amenities and first class feels like the steerage of old.

When you combine a 4.5 percent higher fares per seat flown with all of the full flights you get a company that spews cash, profitable growth undeserving of a minuscule 9 times earnings valuation. I think this airline stock as well as the others can trade higher because it's all about price discipline and the industry seems to have it back under control.

How much pin action did Delta produce? Enough to send the stocks of United Airlines (UAL) and American (AAL) up 5%. I can only imagine how many price target bumps we get with this group tomorrow.

What's the one thing that most airlines do not have under control though? The price of oil, which is a huge variable that has often stung these companies. In fact, they have been stung so regularly that the hedge fund handbook, or at least the theoretical one, says "short the airlines right now," the moment oil inches up a couple of centavos.

Yet here's oil up again, this time bursting through the $64 level and it doesn't seem to matter one whit to them.

But the oil stocks? Hot as a pistol. You know when I renamed Bug, our rescue puggle Chevron (CVX) now that long ago you could tell he was both envious and tortured by the fact that his much less clever doppelganger, formerly Everest, got renamed Nvidia (NVDA) . I don't blame him, either Nvidia's so dumb that he now answers to Nvidia rather than Everest or he caught Nvidia CEO Jensen Huang's boffo keynote at CES about autonomous vehicles. Either way, Nvidia now runs when you say his name, provided you have a steak bone in your hand when you call him.

Well guess what: Chevron's jealous no more. His stock has been screaming and its up four points today on a recommendation about how much cash flow and how many new projects are coming on stream. Who would have thought that an oil company's stock would have such game? Only in this market could an oil stock be a point and change off of its all-time high with oil about forty dollars less than when it reached those lofty levels. Let's see how he greets me when I get home tonight.

The whole cohort's gone nuts. I am tempted to get another rescue mutt and name her Schlumberger (SLB) , as that company has now scored 8 straight unanswered points. That's with an expectation that the numbers are too high. Who know what this stock could do if the company actually made a quarter!

How powerful is this oil rally? It's even got real dogs like Apache (APA) , Anadarko (APC) and Pioneer (PXD) going. Wow, you got a whole kennel going nuts there. Who let those dogs out?

What do you do, though if you are an airline and you need to try to do your best to cut jet fuel costs? Pretty simple, you buy new planes from Boeing (BA) with the Geared Turbo Fan from United Technologies (UTX) that makes a lot less noise and burns a lot less fuel. No wonder both of those stocks can't seem to be kept back. The stock of Boeing tends not to want to wait for the opening bell for lift off. It's almost always rallying well before the opening.

Yet somehow I don't know if enough people really know how amazing Boeing is, let alone care for it at all. When I was walking to the car today I went by the really good Capitol Grille-owned by the fantastic Darden (DRI) -- and these two guys are outside of it smoking, of course -- no doubt to seek their premature deaths -- and they start chanting "Hey Cramer, how about Bitcoin. When you gonna recommend Bitcoin? Bitcoin." It was like a jingle, a mantra and a prayer for the cryptoids all rolled up into one. I would have none of it, gave em the Heisman and said, "no bitcoin, Boeing." I might as well have said put down the Marlboros, let's go have some of my wife's quinoa. Their contempt with my counter of the stock of Boeing was palpable. I am chalking it up to millennial lunacy.

Then there's oil. The worry wart short complex has been out in full force of late, bemoaning the microscopic rise in interest rates of late, saying that a less than a quarter point jump in the so-called long end could cause a catastrophic downturn in the U.S. economy. Who gets hurt the most? Homebuilders, especially homebuilders that have a preponderance of homes in the California area after the loss of state and local tax deductibility.

So the bears were out in full force last night, sharpening their fangs or whatever their teeth are called and licking their paws because KB Homes (KBH) was about to report. The darned thing had already almost tripled since we recommended it on Mad Money so you could make a valuation case alone. That wasn't the gravamen of the case against KB though. It was those "soaring" rates. Next thing you know KBH crushes the numbers, guides up and talks about how the rate rise has meant absolutely nothing to their business because mortgage rates are still at or near historic lows. The company attributes plentiful jobs, bountiful wage increases, a stronger economy and the new tax code as spurs to the U.S. housing market and they are predicting even better times ahead. And that's how a stock that is already up huge in the last few years could rally another 12% today.

Rates aren't up enough to hurt the homebuilders but I think they are up enough to ripple through the earnings we get from the banks tomorrow. Sure, they too are up, but the valuations are so low that you have to think that something's dreadful. Let's hope there is, because that will give you still one more chance to get in the group ahead of the three to four rate hikes I expect this year. Housing and banks, another case where oil and water are mixing.

You want some irony? Get this. We got a report out this morning from Barclays about how Netflix (NFLX) is basically the second coming of the industrial revolution. I swear, it was like reading that the traditional networks are no more than seamstresses while Netflix is the loom. So the stock of Netflix, the only one of the FANGs, by the way, that topped the 2000 percent return of the stock of Domino's during CEO Patty Doyle's remarkable run, leaps another four points.

Yet how are those seamstresses? The stocks of both Discovery (DISCA)   -- one of my faves -- and Viacom (VIAB) are among the market's biggest gainers. Maybe there's life for the seamstresses after all. No Luddites in this tape.

And so it goes. One more day of just incredible performance of disparate groups that are not supposed to be in the same space at the same time. Get used to it. After a day of rest, the beast is back in beast mode and it's coming into the official earnings period with a snortin' nose and a full head of steam.

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