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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets: The S & P 500 was heading into the homestretch on Wall Street up more than 3% on the U.S. and China agreeing to temporary tariff cuts while they look to craft a broader trade deal. With Monday’s rally, the S & P 500 was less than 1% from going breakeven year to date. Consumer discretionary and technology stocks were leading the market. It’s not our style to chase big rallies , especially in a market that’s been so influenced by headlines — both good and bad. For context, as of Friday, the S & P Short Range Oscillator logged its 11th straight session in overbought territory. When the Oscillator, our trusted momentum indicator, is overbought, we tend to look at trimming stocks. Monday’s rally only promises to keep the Oscillator signaling overbought as we wait and see whether the optimism over the easing of U.S. and China trade tensions can last. Broad based: Monday’s rally was so fierce that even drug stocks shook off earlier declines and traded higher by the afternoon. At Monday’s open, shares of pharmaceutical companies, including Club names Eli Lilly and Bristol Myers Squibb , moved lower on concerns about President Donald Trump’s executive order that aims to sharply reduce drug prices in the U.S. , and bring them more in line with what other high-income countries pay. Our CNBC colleague Annika Kim Constantino published a great story examining what we know — and don’t know — about the directive. Legal challenges are likely to ensue, though, and Jim Cramer noted that some of Trump’s plans could require approval from Congress to have more teeth. “I’m not sure whether the president has the backing of Congress, which is why these stocks were down gigantically and have been coming back,” Jim said during the Morning Meeting. Jared Holz, a health-care equity strategist at Mizuho Securities, summed it up this way on CNBC’s “The Exchange” on Monday afternoon: “Today we basically learned that there’s still a lot to be learned, and there really isn’t a plan or strategy in place that is scaring off investors a lot.” Holz did note, however, that the Trump administration is once again taking at middlemen in the drug supply chain, such as pharmacy benefit managers, so it’s not just the drugmakers themselves in the crosshairs. Happiest stock on earth: Shares of Disney are on pace for their fifth straight day of gains — a winning streak kicked off in earnest by last Wednesday’s strong earnings report . After jumping a combined 15% across Wednesday, Thursday and Friday’s sessions, Disney is adding another 4.5% on Monday. It’s part of a broader rally in economically sensitive stocks on hopes that a tariff-driven recession can be avoided now that trade tensions are cooling. If that happens, that should mean people will continue booking trips to Disneyland, “the happiest place on Earth,” Disney World, and its other entertainment destinations around the world. That includes its two new cruise ships set for their maiden voyages later this year. Jim, who was on vacation when Disney reported, called the quarterly numbers “tremendous” on Monday. “That stock has gone from being a real thorn in our side to one that I think, at 19 times earnings, just begs to be bought. Even now, I think the stock can go higher.” We reiterated our buy-equivalent 1 rating and $130 price target alongside our earnings analysis last week. Capital Won: Another Club stock extending its recent rally is Capital One , with shares jumping more than 6% in Monday’s session and breaching $200 apiece. The stock entered Monday up more than 10% since reporting earnings the evening of April 22, and roughly 17% if you go back to the April 16 close. Similar to Disney, Capital One shares on Monday are benefiting from a belief that recession risks are moderating. And also similar to Disney, Jim said he still likes the stock here. Its blockbuster acquisition of Discover is set to close next week, and Jim said he expects a number of analysts will soon publish positive research on what the combined company can achieve. “It’s going to be very important. I want you to stay tuned and not sell the stock. It is still inexpensive,” Jim said, referring to Capital One. Up next: Quantum firm Rigetti Computing , rental car provider Hertz Global , and mall owner Simon Property Group are among the companies set to report earnings after Monday’s close. On Tuesday morning, we’ll hear from Chinese e-commerce giant JD.com , Japanese automaker Honda , and Maryland-based apparel maker Under Armour — all of which have been grappling with the trade war fallout in their own ways. The big event of Tuesday, though, is the consumer price index report due at out 8:30 a.m. ET. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
