Jim Cramer's Stop Trading! Green Flag

The worst of earnings season may already be behind us, Jim Cramer said on CNBC's "Stop Trading!" segment Tuesday.

Cramer said sentiment on the upcoming second-quarter earnings parade is bearish in the wake of poor showings by Alcoa (AA), Lucent (LU) and 3M (MMM). But Cramer said with earnings reports starting to roll in in earnest this week, warnings season is pretty much over, and a flow of good profit news could give stocks a boost.

Cramer also credited short-sellers with the afternoon rally that pulled stocks back into the black. Cramer said many investors no doubt expected a big selloff in the wake of Tuesday's explosions in Bombay, but when that didn't develop, they unwound those trades, leading to a solid rally.

Cramer urged investors to steer clear of Lucent after Monday evening's earnings warning, saying that a freeze on capital spending at AT&T (T) is hurting everyone in the networking group.

Cramer called discount broker Ameritrade (AMTD) a "hated stock in a hated group" after shares in the company failed to rally on a bullish Bank of America note.

By contrast, he says the defense stocks are moving well, thanks in large part to the big buybacks at General Dynamics (GD) and Lockheed (LMT), which he says makes those stocks "spring-loaded."

One stock that has missed out on the rally in defensive stocks like grocers and their suppliers, Cramer said, is TreeHouse Foods (THS), a Westchester, Ill., pickle pusher whose shares have been flat since March.

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