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Cramer tracks 'the bid underneath' to explain why the market rallies on bad news

Elizabeth Gurdus

A trifecta of bad news hit the market today, and one group of stocks — the semiconductor plays — rallied anyway, so Jim Cramer uncovered a signature pattern that boosts stocks even in troubled times.

"We call it 'the bid underneath,'" the " Mad Money " host said. "It's a key part of the amazing sector resilience that explains this market's ability to hang in there even on days like today with a lot of bad news. And frankly, I find the bid underneath in this market astonishing."

Despite negative reports of Syrian airstrikes , allegedly tense U.S.-China talks , and weaker-than-expected employment numbers , chipmakers' stocks, especially of those serving Apple (NASDAQ: AAPL) devices, roared to new highs.

One such company is Skyworks Solutions (NASDAQ: SWKS), a radio and mobile semiconductor play that hit a 52-week high on Friday. Another is Qorvo (NASDAQ: QRVO), which spent 2016 trading sideways and has spent nearly every day in 2017 ticking up.

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Or take Apple sound system play Cirrus Logic (NASDAQ: CRUS), which cut its guidance in its last earnings report but has been "a straight line up" since March began, in Cramer's words.

What baffles the "Mad Money" host is that the move is unfounded, or at least not based on any positive news in the semiconductor space that would fuel a typical rally.

No sellers have emerged even amid the downpour of usually market-rattling reports, so those tired of waiting for their favorite stocks to come down have finally given in and bought up.

"It's just that some portfolio managers just have been waiting and waiting and waiting for these stocks to come down, bidding underneath, as we say on the trading desk, and they aren't being hit, and they can't take it any more so they're reaching for all of them at once," Cramer said.

And the semiconductors aren't the only ones with hidden bids, according to Cramer. He has spotted bids underneath in the housing stocks, railroad plays, and supermarket names like Kroger (NYSE: KR) and Whole Foods (NASDAQ: WFM).

"The bid underneath, and the reach, are classic components of a true bull market," Cramer said. "Another reason why this market, for all its flaws, is a lot more resilient than it looks to the naked eye."

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