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Lowe's rally has been driven by more than just a strong quarter



Lowe shares rose more than 10% after delivering better-than-expected results on Wednesday in the second quarter.

This is not the only thing that sustained the stock rally during the session, when you ask CNBC's Jim Cramer.

With Home Depot, the main competitor to Lowe, outperforming the previous day's earnings estimates, a number of hedge fund managers raised equity and decided to sell Lowe, he said. A short is when an investor makes a bet that a stock price will fall in the near future, and tries to derive a profit from the devaluation.

"This type of trade is one way to bet on the comparative performance of companies in a given industry," said the "Mad Money" host, calling it a "pair trade."

When Lowe's reported this morning, however, they reported having played their hands wrong. The home improvement retailer posted slightly higher sales growth in the US than Home Depot (3.2% to 3.1

%). The trade with couples had been blown up and caused a brief pressure, said Cramer.

"Traders know that discipline excels conviction, that's a rule – when a trade is going against you, you have to fold out, which in this case means you cover your shorts at all costs," he said. "Disciplined short sellers bought back stocks to close out their positions and make up for the loss, and it catapulted the thing into the stratosphere."

Cramer gives more insight into short selling here.

Maintaining the trust.

Traders work on the New York Stock Exchange (NYSE) floor on August 14, 2019 in New York City.

Spencer Platt | Getty Images

Cramer said the economy is in good shape, but Wall Street is in a recession.

The stock market, which gained less than 1% on the trading day, continued its rebound from last week's massive sell-off, triggered in large part by worries over a recession signal, in addition to the continuing US-China trade war.

Both and recorded their fourth positive trading days of five last month, while finished its third in four days.

"If the president calmed the rhetoric against China rather than accepting it as a sort of trash-talking wide receiver, the bears would lose their biggest crutch," said the host, who accused fears over the bond market, "Angry Rhetoric and frightening jeremiads of supposed experts "who should listen to teleconferences.

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The pulse of the middle class

Chad Richison, CEO, Paycom

Scott Mlyn | CNBC

The head of a payroll firm told CNBC that despite growing fears of a looming recession, he sees no signs of slowing in mid-sized companies.

Paycom CEO Chad Richison said his company may not be a big proxy for the rest of the economy, but his company has an impetus on hiring in the country. The cloud-based provider of human capital management has digitized how employers manage their HR stores.

The technology company is a disruptive factor in the payroll industry, with more than 23,500 customers, targeting companies with 50 to 5,000 employees.

"I think the economy was strong," Richison said in a one-on-one interview with Cramer. "We do not really see any deterioration in growth in [medium-sized businesses]but you know, we'll wait and see what happens."

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Cramer's Cloud Cover

Dean Stoecker, CEO, Alteryx

Scott Mlyn | CNBC

Technology has affected virtually every industry, and a subset is changing the backend of business operations.

Cloud computing has been a topic of secular growth in recent years, which has been one of the hottest parts of the market, but the average person can not explain what the companies that make up the group actually do, said Jim Cramer of CNBC on Wednesday.

The "Mad Money" host has a number of its favorite stocks in the industry under the name and crowned riskier "Cloud Prince" umbrellas, but only advises investors to own only companies on which they have done their homework to have.

"There are many great opportunities in the cloud space, but if you want to own those stocks, you need to understand what these companies actually do, and that's why we're doing this whole cloud primer series," he said.

Cramer collapsed and made recommendations on 11 names in the cloud-based software cohort.

Go deeper here Home Depot.

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