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PEP, KMB, STX, IBM: Jim Cramer's Views By Jim Cramer | Oct 19, 2015 | 01:00 AM EDT

NEW YORK (Real Money) -- Jim Cramer shares his views every day on RealMoney. Click here for a real-time look at his insights and musings.

Anatomy of a Rally: Simpler Than You Think

Posted at 2:00 p.m. EDT on Friday, Oct. 16, 2015

Day two of the slowdown thesis is upon us. On day one, traders buy the highest-growth stocks. That's why we saw aggressive buying in the biotechs and the fastest-rising technology stocks.

STOCKS TO BUY: TheStreet's Stocks Under $10 has identified a handful of stocks with serious upside potential. See them FREE for 14-days.

Day two? You buy the staples. The companies that won't miss even if the economy stutters, the ones that have much less risk even as they have much less reward, the chicken growth stocks, as I like to call them. You buy the Pepsicos (PEP - Get Report) and the Kimberly-Clarks (KMB - Get Report) and the Krafts (KHC) and the Eli Lillys (LLY) of the world and accept that you will sacrifice upside for sleep-at-night steady profits. (Kraft is part of TheStreet's Action Alerts PLUSportfolio.)

I like to teach this kind of stuff because I want you to understand why stocks act like they do. So often, we see random moves, stupid moves even, and we think the market's irrational. Take General Electric (GE), which I have been urging people to buy for ages but have accelerated the push since Nelson Peltz, the brilliant activist, got involved to help CEO Jeff Immelt get the most out of his company. This morning, General Electric reports a terrific quarter, fabulous organic growth, great margin expansion and excellent revenues. But the clown headline writers immediately put a negative and ridiculously wrong spin on the sales growth and the stock trades down before market trading. Investors then come to their senses and the stock's off to the races. (General Electric is part of TheStreet's Dividend Stock Advisor portfolio.)

I am not talking about this...