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Cramer's 'Mad Money' Recap: A Tale of Two Markets

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NEW YORK ( TheStreet) -- Which market is the real one, Friday's big rally or today's beat down? That's what Jim Cramer was pondering on "Mad Money" Monday.

To Cramer, the market's volatility represents the reality of our world. All is not well, but it certainly could be.

There were many factors driving Friday's market rally, Cramer told viewers. Many investors, himself included, had high hopes for a Chinese recovery. That's why his charitable trust, Action Alerts PLUS, has been buying the iShares FTSE China 25 Index (FXI) .

Cramer said many other stocks were also bullish on China, including Nike (NKE) , Yum Brands (YUM) , Joy Global (JOY) and Cummins (CMI) . The rails were also strong on Friday, hopeful a growing Chinese economy will require more coal from the U.S.

Then there was retail. Good feelings about this year's holiday shopping season were tipped by positive comments from Wal-Mart (WMT) and spilled over into a plethora of other retail names. The markets were also spurred by positive feelings from Washington about the looming budget negotiations.

But all of these positive notes were lost on the market Monday, said Cramer, as today's headlines included new worries about Greece, no interest rate cuts from China over the weekend and the lack of a compromise in Washington.

As if those negatives weren't enough, new surveys surfaced that holiday shopping was not as strong as predicted, although that wasn't enough to stop shares of Apple (AAPL) , another Action Alerts PLUS name, from rallying.

So which market is the real one? Cramer said it's a little bit of both, which is why he continues to remain cautiously optimistic.

Big on Ross

Investors looking for a hot retailer for this holiday shopping season need look no further than Ross Stores (ROST) , Cramer told viewers. He called the company one of his continued favorite retail names.

Ross shares have fallen well off their highs, from $70 to just $56 a share, largely in line with the broader markets. Some analysts were also spooked by the company's most recent quarterly results, which only delivered a 6% increase in same-store sales and tepid guidance going forward.

But Cramer said Ross is likely just being conservative with guidance, setting itself up to under-promise and over-deliver next quarter. He also said the 6% increase in same-store sales was actually very strong when compared to other retailers.

So why does Cramer remain bullish on Ross Stores? Mainly because the company is a regional to national growth story, one with lots of room to grow. He said the company's strategy of buying distressed merchandise from high-end retailers, then packing it away until next year has been a winning one that affords shoppers great deals. Additionally, Ross is also a play on the housing recovery because 25% of the company's items are home-related.

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