CNBC's Jim Cramer on Tuesday advised investors that it's time to lock in the gains from the run in the pandemic plays and get more exposure to the recovery
Cramer, who crafted the Cramer Covid-19 Index of 100 stocks he projected would benefit from the lockdown environment, signaled that he's warming up to the economic recovery thesis as the market rebounds from the coronavirus-induced slowdown that started in the first half of the year.
"You need to stick with what I call the barbell, meaning own some recovery stocks and some Covid stocks, but I do think it's time to lighten up on some of those Covid names and swap into more stocks that are like Honeywell and DuPont," the "Mad Money" host said.
"Don't be greedy with the Cramer Covid-19 index [names]. As we get closer to slowing [the pandemic], it will be time to ring the register on at least some of the stocks that do better when Covid thrives," he continued.
The comments come after the major averages all tumbled during the trading day, a down-day that was driven by late-afternoon selling to snap a multi-day winning streak in the Dow industrials and S&P indexes. The Dow Jones slid more than 104 points, or 0.4%, to finish at 27,686.91. The S&P 500 dropped 0.8% to 3,333.69 and the Nasdaq Composite fell for the third-straight session 1.7% to 10,782.82.
Cramer characterized the day as the third in a rotation from the fastest-growing pandemic winners into the laggards. The top pandemic plays were largely in the technology space, especially stocks of companies that benefited from the work-from-home environment, such as Zoom Video, Big Tech and cybersecurity investments.
"Now, though, there are plenty of signs that we're leaving the trough, at least for the publicly traded companies that have been stuck there — the recovery plays," Cramer said. "I suspect the cyclicals, industrials and banks could lead us from here, not the Covid stocks, although that doesn't mean they'll get destroyed."
Cramer pointed out, however, that the market is not representative of the broader economy, which continues to be challenged by a double-digit unemployment rate, looming rent crisis and ongoing uncertainty in containing the spread of the deadly Covid-19 disease. Still, there are signs that the worst could be behind the market.
"If you think we'll be in the clear six months from now, then you have to swap into the recovery stocks now, because if you wait for the" all-clear signal, "I promise you you'll be too late," the host said.
Disclosure: Cramer's charitable trust owns shares of Honeywell and DuPont.
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