Cramer: If This Group Rallies, We Have A Big Problem

Sector rotation, that is a shift of dollars from one sector to another, could in some cases serve as a scary sign, CNBC's Jim Cramer argued during his daily "Mad Money" show Friday.

A bull charge is typically defined as new money flowing from the sidelines into stocks, mutual funds buying in "endless waves" and hedge funds refusing to go short a stock and preferring to take the long side of the trade, Cramer explained. This represents the "land of the thousand bull dances" and investors don't need to worry where the "fuel for a rally is going to come from."

However, when there is a shortage of new money coming into the market, investors may be tempted to sell stocks in one sector and simply move that cash over into another sector. This creates a zero-sum scenario for the market as a whole.

More importantly, as investors take money out of hot sectors like technology, they start allocating capital toward the "wrong stocks" — that is those belonging to the food or pharmaceutical sectors. In other words, if a stock like PepsiCo, Inc. PEP is leading the market, then investors should be concerned.

"You never really want to see any of the consumer staples roaring higher in a sustained advance because it means people think the economy's going to either get worse or simply stay in awful shape for a long time to come," Cramer said.

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