Days like today remind you why you stay in. We have tons and tons of negativity thrown at us on a daily basis. There are no real champions of the markets despite their superlative, record-shattering performances.
But just when you think it's got to go down because of the alleged transgressions of the sons of the fathers, or at least Donald Trump's son, or because Fed chief Janet Yellen may say the wrong thing on Capitol Hill, or because of North Korean ICBMs pointed toward the Aleutians, or because the inevitable stocks have run too much for too long, you get a day like today where, let's hope, you can remember that things can work out for the bulls.
What triggers this kind of rally? We always get a variety of things that drive this market. We had Yellen telling a good story of growth without inflation, something that always drives in buyers. We have a big dip in interest rates, which reminds us there are plenty of higher-yielding stocks that aren't worth throwing away. And we have rumors that chief economic adviser Gary Cohn might be named the new Fed chief. I know there are some people who say, whoa, that job belongs to an economist. I say Cohn's been a non-classically trained economist who has offered the best, most thoughtful insights about why wages haven't gone up and inflation remains low.
Meanwhile, who could possibly be a better Fed chair right now than a trader by background who would know how to trade and place the several trillion in bonds that the Federal Reserve owns? Maybe Cohn, who is so shrewd, would recognize that the Fed should sell its bonds first before a slew of rate hikes. An economist may not get that. Yellen sure doesn't. These are strange times. I don't trust an economist to get the Fed out of its position. I trust a guy who used to be No. 2 at my alma mater, Goldman Sachs.
So what happens when it comes together? We get an incredibly broad rally that encompasses so many different groups that it reminds you at least that if you don't want to buy, you are getting a terrific chance to sell stocks at higher prices than they were before and perhaps even than they deserve to sell at.
Why don't we go over 10 points of positive action that allowed us to soar higher and show how rallies can come together based on fundamentals, not just sentiment.
Let's start with FANG, which had become a bit of an outcast of late. In the last 24 hours, we heard that Facebook (FB) is going to charge for Messenger, one of its greatest yet-to-be-monetized assets. How terrific is that? Amazon (AMZN) ? Prime exceeded all expectations, which were very high. Netflix (NFLX) is catching a lot of love just today from analysts who are seeing great international growth. And Alphabet (GOOGL) won a billion-dollar tax fight in Europe. Europe, of all places. They always lose in Europe.
Next, the cyclicals, no doubt reacting to a stronger Chinese market, are rallying nicely and Caterpillar (CAT) crashed through to a 52-week high. That's an amazing run and there's no better sign of worldwide growth than that stock hitting those hallowed levels.
Third, here's a highly unusual one when CAT hits a high: a sustained move by the drug stocks. When the Fed chief says we have admittedly slow growth with no inflation to speak of, the playbook -- and I am sure the algorithms -- say reach for Eli Lilly (LLY) , Johnson & Johnson (JNJ) and Allergan (AGN) . Never doubt the playbook.
Fourth, the airlines got some fabulous revenue news from American Airlines (AAL) that comes on top of good numbers for United (UAL) and Southwest (LUV) . I love any rally that's led by the airlines because it means the transports can break out, thereby confirming any rally in the Dow, meaning that it is most likely correct that the advance is occurring.
Fifth, oil didn't get clobbered. I keep harping on the idea that this group punches above its weight, meaning that when it goes down and crude goes down, they have the power to hurt the overall market. Once again, at $42-$43 traders and analysts got way too negative about the group. I am a strong believer in what our resident commodity seer, Carley Garner, says since she told us to sell in the $50s and buy in the low $40s, and she seems pretty confident that $50 could be next. Don't forget to sell when it gets there, though.
Sixth, even as the bank stocks stalled as interest rates went lower and Yellen indicated a measured pace to the rate hikes, we got a big move in the payment processors, my proxy group for the financials, led by Cramer fave PayPal (PYPL) , which is finally getting its due. Remember when Visa (V) , MasterCard (MA) , Google, Wells Fargo (WFC) , JPMorgan (JPM) and Apple (AAPL) were supposed to destroy PayPal? Well, with the inclusion of PayPal in the Apple ecosystem, something we found out yesterday, PayPal has partnered with all of them. Way to go, CEO Dan Schulman! Oh, and it doesn't hurt that the bank stocks sell off a little ahead of their reports Friday. Never helps to come into earnings with a head of steam.
Seventh, the cloud and artificial-intelligence stocks all rallied, making the tech move pretty broad-based. We highlighted these names last night and they are all taking off. That's some nice leadership. Never hurts when Nvidia (NVDA) rocks the house either. What a horse that is. Or a dog, as I have renamed my dog Everest Nvidia because they are both stalwarts who would bite any shortsellers. Sic 'em, Ev. I mean Nvidia! Don't forget Autodesk (ADSK) , Red Hat (RHT) , Service Now (NOW) , Salesforce.com (CRM) , Oracle (ORCL) and Workday (WDAY) as go-to performers.
Eighth, some of the bedraggled retailers that had seen their stocks being decked by Amazon are starting to mount a comeback. I like the fact that Home Depot (HD) , which I understand to be having a good quarter, is ramping. I didn't see much on Amazon Prime to steal any of that great retailer's thunder, or customers for that matter. Same with Walmart (WMT) , which I think didn't deserve to sell down that hard and represents some real good value.
Ninth: Europe's up again. We always seem to forget how important Europe is. That continent has 777 million people and it's getting back on track. Big rallies in this country are often mounted on turns over there and we had one this morning. I continue to pound the table on the continent and think it will be a bright spot in the second half of the year.
Tenth, the market was able to shrug off a lot of negative stories about the largest capitalization stock there is, Apple, including that the iPhone will be late. There are so many companies connected with the iPhone, yet for the most part they were able to rally nicely with Broadcom (AVGO) , a huge Apple supplier jumping more than five points. (Facebook, Alphabet, Allergan, Southwest, Wells Fargo, Apple and Broadcom are part of TheStreet's Action Alerts PLUS portfolio.)
Now I want to go back to the concept I talked about at the top, which is that if you don't like the market, you are being given an incredible gift. Today's the day you should skedaddle, or tomorrow as I doubt there's that much news between now and then if you truly hate the market, not when it is getting clobbered.
What matters is that patience does get rewarded and occasionally the market elects to do what's rational, not stupid, and it's a delight to watch it unfold.
Eat, Drink and Talk Money With Jim Cramer
Meet Jim Cramer at an exclusive reception at his Bar San Miguel in Brooklyn, N.Y., on Tuesday, July 25, from 6:30 to 9 p.m. ET.
The evening will start with a screening of Jim's CNBC show Mad Money. Afterward, Jim will join the party fresh off of the CNBC set to mingle, take photos and answer your investing questions.
Tickets include dinner, drinks and an autographed copy of Jim's book Get Rich Carefully.
Click here for more information or to buy tickets.
Where: Bar San Miguel, 307 Smith St., Brooklyn, N.Y.
When: Tuesday, July 25, 6:30 to 9 p.m. ET