Jim Cramer looks into the factors moving this market

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a homework in somewhere, and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Kramerica. I don't think we want to be friends. I'm just trying to make you a little money. My job is not just to entertain, but to educate, to explain how we can keep going up like this. So call me, 1-800-743-SIMPLE-C. Tweet me at Jim Kramer. Where, I ask, where are the sellers? Where did they go? For years, every time we had a monster rally, it was always met by giant selling at every turn. Because when you offer higher prices, sellers step up and they drill the bids. Slam the buyers. Take the profits. But all year, and especially days like yesterday and today, we just keep running and running and running. With the Dow dropping less than one point, but the S&P gaining 0.74%. And the NASDAQ, oh, it just can't quit over there, jumping another 1.5% today. Partially aided by the Fed's quarter point rake-up. But on top of yesterday's giant rally, this is incredible, people. What can I tell you about this? For starters, many of the commentators who come on air talk about it. They don't seem to understand how unusual this market is. They love to rant and rave about how stocks have gotten to dangerous levels. That they're ridiculously expensive. That, look out, it's going to be. Well, there's some truth to that. Yeah, no matter what levels the S&P 500 seems to reach, we can't seem to find any large sellers. They should be coming out of the woodwork. That's the real oddity, people. It's an extraordinary across-the-board bullish scenario that I've never seen in an entire 42 years of investing. So what is driving the bull? What is this market's badness? How about we step behind the curtain and find out? First, let's talk about the mechanics of trading. I'm talking about institutional money management here. If you want to buy a stock, your trade won't move the price. You get what it is. Unless you're on a trading desk putting millions of dollars to work on a fast clip. Let's say you are a portfolio manager. I'm going to start with a small order, frankly. And you want to buy 250,000 shares of Home Depot. That's a $399 stock. It closed up 11 today. The great building supply company has 993 million shares outstanding. All right, down from 1.1 billion shares. That's some buyback. Maybe you want to buy what we call the despot because you were confident that the Federal Reserve would keep cutting rates. Correctly confident. Normally, you pick up the phone and tell your broker that you want to buy 250,000 shares of Home Depot. With a stock at $391 where it opened, already up roughly $3 for the day before. You might say, you know what? At $391, you have a $392 top. That means you'll pay up to $392 for the money. Now, for a company with almost a billion shares outstanding, a quarter million shares doesn't seem like much, does it? But not in this market. In this market, which is so devoid of sellers, it is a lot. That's incredible in itself. No matter, you are determined to get all your stock in all at once before others move it higher with their buying. You want it in because you know the despot's a winner when the Fed is slicing the rates. The broker then asks the salespeople at his firm whether anyone has a client who wants to sell 250,000 shares at a premium price or some other term that says that their client that he's got, got more to buy or at least wants to buy it at a higher price than is currently traded. Now, normally, that announcement of a big buyer would elicit a chain reaction. Brokers who heard the trader say he had a client looking for stock would make their calls. And there'd be a lot of interest because while there may be no sellers at $391, well, $392, that's a better price. It's enticing. But not in this market, though. In this market, that's only a nominally higher price. It might not bring out anyone who wants to sell. People are almost afraid. They're scared to sell. They are scared. They don't want to miss what's about to occur. In this market, once people hear there's a seller three points above where it was yesterday, oh, they get skittish. No, even worse, they want four points higher. Yeah, they want to make even more money. Now, in the old days, in the old days, it wasn't like this. In the old days, if there were no sellers close to the price that the buyers wanted, the broker would actually short the stock to the customer. Might sell 50,000 Home Depot short one-fifth of the customer's order to get the order. That's up $1, $392. And you know what? Then with the stock up a dollar, maybe the sellers would emerge hoping they could get, say, $392.50. Anyway, it would make it so the broker retained the order. But in this tape, that $1.50 premium tends not to bring out any sellers of size. That's amazing. Are people being greedy? No, the sellers are often nonexistent these days, especially now that the elections settled. The trader, of course, is now on the hook, having shorted 50,000 shares at $392. If sellers don't appear and it gets out somehow that a trader short, well, boom, there is just a blitz of buy. And then they force the trader to go cover the short of $0.50 or a dollar, really burning his firm. These days, it's way too dangerous for a trader in a brokerage firm to short stock. Another reason why stocks go up, bang, like that. So it's more likely that the trader will need to sweep the street to find the shares. And this is where it gets really interesting. Think of the setup. All the big traders operate with pretty much the same playbook. They know that when the Fed cuts, it's good for housing. So what do you do if it's good for housing? Well, you buy the stock of Home Depot. Yesterday, the stock was down because of negative action in the bond market. But rates are lower today. It's a natural buy. You reach for HD. In this scenario, sellers have the upper hand because when we all know that something like Home Depot is the right stock for the moment, the sellers are confident they can get a higher price. With those hundreds of millions of shares outstanding, you'd expect someone to be willing to sell, though. But the problem is there's not just one buyer. There's multiple buyers. Everybody has the same playbook. You might have 30 buyers bidding for the same quarter million shares of the despot. And everyone who panicked into selling when the stock was down yesterday, well, they're already sold. There are no natural sellers. And that goes double now that the Fed ratified the housing bull market. Meanwhile, there are two other forces that are competing with you to buy stock. There's the company itself, which has been a regular repurchaser of its own stock for years. And then there are the index funds, which now are inundated with cash that's got to be put to work the moment it's received. And they have to put it to work at any price. Buybacks and index funds are one way players. It's not like they're selling anything here. So you have three buyers, the natural buyers, the index funds and the company itself. And they are all in buying at once. In this market, that's enough to push any stock hard until sellers are finally found. Sure, there are plenty of times when sellers do emerge, but not sellers of size these days. If there were sellers of size, the stock at Home Depot couldn't have shot up 11 bucks today. That's because there were no sellers. It's a totally asymmetrical moment. We have buyers who went in because they're excited about a second Trump term after a decisive election. There are buyers who went in because when the Fed rate cuts rates, historically, that means Home Depot is a big winner. And when we have traders who need to buy because they've gotten orders from index funds that don't care what price they pay, well, you know they're going to move stocks no matter what. Now, the sellers know they got zero motivation to sell. So the stock ends up levitating as there truly are more buyers than sellers at lower prices. Now, these battles do go on every single day. But what's different this time is that there's never been such a dearth of sellers. Why? We don't have a lot of people selling Home Depot because we don't have them. They don't need to raise money, say, to buy IPOs. We don't have any IPOs. We have a dramatic reduction in shares outstanding. There's so many companies have been aggressive in buying back stock. We have almost no company selling shares to raise money because their balance sheets are so superb. And there's endless index buying, which automatically includes Home Depot. In a market with so few sellers and so many buyers, those buyers need to pay up if they want to get their hands on some shares. That's how a stock goes up 11. But they're willing to pay up because they're so worried that tomorrow about to be more than they did today. Bottom line, it is an incredible moment, people. It's not being talked about enough or celebrated. The sellers are afraid to sell. The buyers are incredibly eager to buy. And that's how the stock of Home Depot can rally 11 bucks today or no real news aside from a widely anticipated rate cut. But who knows what will happen tomorrow? Mike in Illinois, Mike. Hi, Jim. How are you today? I'm having a good day, Mike. How about you? I'm great. I'm looking to add a chip stack. I have Nvidia and ARM. Should I go with Broadcom or AMD? Oh, you know what? I'm going to suggest that you go with AMD because it's the most beaten up and hasn't made you nearly as much. I saw it and finally caught a bid today. I think Lisa Sue's doing a great job. AMD is the laggard. I see 160 coming. I just feel it. Steven in New Hampshire. Steven. Jim. Booyah. Booyah, Steven. Jim, thank you very much for all the help you've been giving me lately. I just can't even explain. Thank you. Thank you. Thank you. You're forcing me to join your club. Oh, that's what I want to hear. Remember, we've already lined up. Jeff and I are going back and forth today about so many different stocks. It's so exciting. The 10-20 broadcast is worth the price of admission. How can I help you? Well, my question is this. There's a company that manufactures things like radar, Patriot missiles and so on, which might be in demand given the current situation in places in the world. And what I don't understand is why the dip on GX. I just can't get my head around why the let's let's. OK, so let's go over this. This has been one of the greatest. This stock was up 45 percent this year. This is a big cap stock. It was down a lot because they had some sort of problem with with their engines, which was totally incorrectly perceived. And I think that what you should say instead of saying, why is it down? I think you should say, hey, you know what? Let's do some buy. All right. We're in the midst of an incredible moment for this market with so few sellers and so many buyers. That's how a stock like Home Depot can jump 11. The buyers keep stepping in because they're worried they might have to pay even more tomorrow. Everybody tonight, DraftKings is on the move after crossing the tape. The company's top brass is joining me to break down the quarter and how betting was affected by the ballot box and the winning parlays. And should you be buying in utilities against the backup of data center growth? I've got AP's CEO to see if the stock's light guidance could be a chance to get plugged in. Plus, Tanger's on the run after a beat and raise quarter. What a monster. I've got an exclusive with the Wheat's CEO, fresh off of another bed cut. So stay with Kramer. Don't miss a second of Mad Money. Follow at Jim Kramer on X. Have a question? Tweet Kramer. Hashtag Mad Mentions. Send Jim an email to madmoneyatcnbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.