Cramer: These 2 groups bottomed—and no one noticed
The last week of August may have just been another week devoid of economic activity for some, but to Jim Cramer—everything changed.
"If you look back at that week, you will see something uncanny among all the charts of the industrials and old tech stocks: a bottom. That's right, those stocks, which had pretty much been in free fall for most of the summer, started their pivot right then," the "Mad Money" host said.
Cramer has been over and over the numbers trying to figure out what changed that week. The answer? Not much at all.
The only noticeable market input that week was universally pooh-poohed as being phony. That was the week that the Chinese stock market bottomed.
On Aug. 26, the Shanghai Composite (Shanghai Stock Exchange: .SSEC) hit a bottom of 2,927, and that has held, even through a wave of bad Chinese economic data.
"Amazingly, if you overlay the stocks of our industrials and techs over that index you will see a correlation that is more than a little startling," Cramer said. (Tweet this)
There was also another data point that shocked Cramer. Two days prior to the Chinese bottom, oil stopped going down. Black gold hit $38 a barrel that day and hasn't looked back since.
And while Cramer does not know whether China or oil had more of an impact on the industrials, he does know that every single chart of the major oils bottomed. Industrials and old tech stocks have been headed straight up since that time.
Additionally, there has been no similar correlation to high growth tech stocks or the biotechs. The bottom was limited only to the oils and industrials. Meaning, the cyclical stocks are the ones roaring back.
"To me, the strength in the industrials and old techs is all about China, which makes for a more compelling view of what is happening right now," Cramer said. (Tweet this)
And most interesting to Cramer is that the bottom in oil and industrials has been almost totally unheralded because no one believes that the bottom in the Chinese stock market was real.
But when Cramer stepped back, he saw it as clear as day.
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The "Mad Money" host believes that both the bottom in industrials and the bottom in oils are lasting. If that is the case, then anyone who has not participated in the oil and industrial rotation could get run over. Those who have been buying into the consumer packaged goods will turn out to be right.
"I will stick my neck out, though, and say both trends are for real," Cramer said.
If he is right, Cramer anticipates that investors will have radical rethinking of the stocks they choose for their portfolios going forward for the rest of the year. That could impact everything from General Electric (GE) to companies linked to the Chinese consumer and those stemming from an emerging marketplace.
That means it's time to start your engines; in Cramer's book, the oils and industrials could be the major winners for the rest of 2015.
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