Jim Cramer: This Is a Market of Stocks, So Shop Around

Clean up in aisle seven!

When you hear that in a supermarket, you have to brace yourself for the mess if you need something in seven. Or, it means nothing at all to you, because you are not in that aisle and don't want to go there.

And so it goes with the stock market, which has a series of aisles -- some of which need cleanup badly, namely the industrials and the financials, and some of which have high demand, and it's tough to keep the merchandise on the shelves.

Here's the problem. Most people simply refuse to recognize it is a market of stocks. They've been pretty much brainwashed that they should be in index funds, so I don't blame them. When really rich managers come on CNBC, they are often so big that they can only be trading the stock market. They would overwhelm most stocks if they tried to get big in them and it is easier for them just to trade the S&P 500 futures which, of course, contain every aisle.

You don't have to do that. You can avoid the messes and head for the aisles that are favored and can stay favored.

Sure, you can dabble in Aisle 7 that's fine, but let's talk about making money by going down the safer or the fastest growing aisles and see if the pressure that comes from the index fund and future selling people create an edge, a discount that's unwarranted.

First, let's describe what makes an aisle hot and then what makes an aisle messy. You get a crowd stuffing carts with anything that moves in the two aisles that are growth-oriented, both senior and junior fast movers, and that's a reflection that we could be experiencing a cool down in the economy or that the Federal Reserve might be about to tighten, because there is too much inflation in the system. When the Fed tightens and gets inflation under control, you buy growth stocks. That's a very convoluted playbook, but it does explain the fervor in these two aisles.

Then there's where the jars are smashed and the liquid's all over the floor: That's the industrials, where the glassware's flying all over the place and there aren't enough mops to clean up the mess. Lately the bank aisle's gotten real messy and people were slipping and falling Monday when JP Morgan's (JPM) Jamie Dimon talked about a 38% decline in trading revenue.

Ouch!

That's much lower than expected. Of course, in an aisle it's hard to knock over one jar without taking down the others, and we saw big hits to the stocks of Goldman Sachs (GS) and Bank of America (BAC) , even as the latter told a very positive story Monday morning on Squawk Box.

I am going into the specifics of the individual stocks in that particular section of the Stock Supermarket for one particular region: unlike the other aisles something really happened, the reduction in estimates that will be followed Tuesday by number cuts and downgrades.

The other aisles? Nothing happens and that's what is so disconcerting to most. For example no one said boo about Caterpillar (CAT) and yet its stock fell for the fourth straight day. Some might say that's because the infrastructure bill failed. It's now down 30 points from its high of $246.

I think it's going down because of a perception that the Fed is going to have to change its view when it meets and Fed Chief Powell speaks on Wednesday, because inflation is raging. He will have no choice. That's why the Dow Jones industrials really got hit -- they are filled with stocks that would be crushed if we had a taper tantrum, meaning that Jay Powell bends to the will of those who think that we are headed toward hyper inflation if he does nothing. These are people who claim to be worried about the legacy of Jay Powell and a too lenient Fed.

I think this view is unlikely. In fact, I think the Fed is very committed to an easy course, even if you think inflation is out of control, because Powell is a humanitarian Fed chief who actually wants the working person to do better and wants lower unemployment among the disenfranchised. If the cost of that is a little inflation, so be it.

That means I am willing to wade in to this aisle and start picking up bargains Tuesday when the mess is still being cleaned.

But how about the robust and bustling aisles? What's there for me, if I believe that inflation is running its course and the Fed knows best? Let me introduce you to the two most important terms in the investing universe right now: senior and junior growth stocks. While I still love the term FAANG, my acronym for Facebook FB , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet's Google (GOOGL) , I think we have to broaden it out, because there are many senior growth names being put in the shopping cart besides FAANG. For example, we had a big move in Adobe (ADBE) , ahead of its earnings June 17. This stock, which had lost its lift not that long ago, actually hit its all time high Monday. It better be good. Microsoft (MSFT) works, as always. Nvdia (NVDA) just rocks it. And, after long dormancy, Salesforce.com (CRM) has started to run.

When the banks plummet, money flows into the fin-tech banks, banking light so to speak, and, as usual, PayPal (PYPL) and Square (SQ) see panic buying. Maybe fintech should have its own aisle.

Then there are the junior growth stocks and this is really what's been soaring of late. Twilio (TWLO) the fantastic company that allows you to push messages to customers seamlessly, Roku (ROKU) , the chord cutting kind, Crowdstrike (CRWD) , the guys who stop the crypto-kleptos, Etsy (ETSY) , the online supermarket, and DocuSign (DOCU) , the de facto way you now do deals. Included in the very junior portion of the aisle? All of those stocks that are loved by uber portfolio manager Cathie Wood. Often she seems to keep these stocks up all by herself.

Now I am not against FAANG and friends. In fact, I have been its biggest supporter and as I said a week ago, in conjunction with Larry Williams' amazing work, this is the senior growth stock to own. But we will hear more from Larry's work later in the show and I don't want to get too ahead of myself.

But I am beginning to believe that it is time to examine the stocks in that godforsaken aisle where people seem to be slipping on copper and lumber and iron ore. If you think, as I do, that the Fed is going to keep the fires going, you need to be thinking of a steel stock, or heavy machinery company or a chemical company: think Cleveland-Cliffs (CLF) , Caterpillar and Dow Chemical (DOW) . I even sanction some energy stocks, because so many of these companies have changed their suboptimal ways.

In fact, I think that I may wade in Tuesday with some charitable trust money for my Action Alerts PLUS member club for one simple reason: These companies thrive when the economies worldwide thrive, and that's exactly what I think is going to happen.

But for now, until we see the whites of the Fed's eyes Wednesday, you can expect the same aisle traffic in the store during tomorrow's hours.

(PYPL, CRM, NVDA, MSFT, GOOGL, AAPL, AMZN, and FB are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

At the time of publication, Jim Cramer's Action Alerts PLUS member club was long PYPL, CRM, NVDA, MSFT, GOOGL, AAPL, AMZN, and FB.