Jim Cramer: Nasdaq closes at a record as recovery and recession stocks both rally

"This was a day when both the recession stocks and the recovery stocks worked, and long-term that's just not sustainable," the "Mad Money" host said.

Wall Street players are divided between two investment themes as investors try to gauge which way the coronavirus response and economic recovery is headed, CNBC’s Jim Cramer said Monday.

The optimistic and pessimistic investors are placing opposite bets in the market, explaining why both the recession and recovery stocks both carried the market higher, the “Mad Money” host said after the market close.

“Because I don’t know is why I prefer a barbell, where I pick some recovery plays — like Disney — and I pick some Covid plays,” the “Mad Money” host said. “Maybe that’s why all these stocks can rally at the same time, because someone has got to be wrong.”

The Dow Jones rose about 153 points, or 0.59%, to a 26,024.96, the S&P 500 lifted 0.65% to 3,117.86 and the Nasdaq Composite rallied 1.11% alongside reports that coronavirus infections are rising.

“This was a day when both the recession stocks and the recovery stocks worked, and long-term that’s just not sustainable,” Cramer said. “Sooner or later, someone, one of these two groups, has to be wrong.”

America awakens trade

Investors who are counting on the U.S. economy to bounce back from the coronavirus recession as the country continues to progressively reopen are predicting that consumer spending will quickly return due to pent-up demand. Those investors share the sentiment of White House economic advisor Larry Kudlow, Cramer noted.

“These optimists,” he explained, “are betting that we’ll come back stronger than ever. The recession? It ended. Joblessness? Rear view window. Covid? Fatalities have plateaued and are coming down. Plus, the Fed has every major company’s back, so there’s no need to sell stock anymore.”

Cramer revealed the following as popular buys among the group:

Nike
Best Buy
Gap
Home Depot
Carrier
Freeport-McMoRan
Disney
Coronavirus recession theme

Investors who are worried that the economy — plagued by a spike in Covid-19 cases and widespread unemployment — think the situation can get even worse, Cramer said.

He said these investors are buying the following stock:

Campbell Soup
Conagra
Clorox
Etsy
Shopify
Square
Apple
Zoom Video
Chipotle
Fortinet
Palo Alto
Zscaler
Crowdstrike
Amazon
Netflix
Economic doom

Cramer highlighted that a smaller group of investors, fearful of the state of the economy and that inflation could rise as the Federal Reserve prints money, are buying gold, including:

SPDR Gold Shares
Barrick Gold
Newmont Mining
Agnico Eagle
“When we get a vaccine, the America Awakens crowd will be right, and I’m very confident we’ll get a vaccine, eventually,” Cramer said. “I don’t believe the naysayers … I just don’t think it will come soon enough to justify going all in” on recovery plays.

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