Jim Cramer: Market Rotation Isn't Just About Small-Cap Stocks

Jim Cramer highlighted Monday that the recent market shifts are about more than small-cap stocks rallying.

“The market is not experiencing a small-cap rally but a rally in everything except the tech titans. Mega caps have become ‘share donors’ for virtually every other stock,” he said. “It’s the great broadening, and we should see it as bullish except for the big-cap techs reporting this week.”

Cramer emphasized that this is not just a surge in small-cap stocks but a broader market expansion. He noted that large institutions might be buying low-quality small stocks as part of indexes like the $Russell 2000 Index(.RUT.US)$ or S&P Small Cap 600, meaning they have to take both good and bad stocks.

He pointed out that larger companies are also seeing gains, citing $McDonald's(MCD.US)$ ’s as an example. Despite reporting an earnings miss, McDonald’s stock rose over 3% due to market broadening and initiatives like $5 value meals to attract more customers.

“When Wall Street loved the ‘Magnificent Seven,’ a stock like McDonald’s would have been hit hard after such numbers,” Cramer said. “But now, the market’s interest has shifted, and McDonald’s performance was expected.”