Cramer's 'Mad Money' Recap: Wild About Defense

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"The higher prices we had this morning were a gift so we wouldn't get beat up," Jim Cramer said on his "Mad Money" TV show Tuesday.

"I hope people sold the sectors that are totally untouchable -- the banks, homebuilders and most definitely the brokers."

The worst-case scenario keeps playing out, so sell what's not working, he said. This is a tough market, and what's making it tougher is the financials. The whole market is not in bull mode, but individual sectors are.

Therefore, once market players sell the bad, they should slowly redeploy their capital into the bull markets that are still working, such as aerospace, machinery, agriculture, minerals, infrastructure and oil and oil services, Cramer said.

In addition, Cramer said he has a brand new bull market people can get into as they sell the stocks that are not working. "After this quarter, defense has become the seventh bull market," Cramer said.

Defense stories have dominated the front pages of the newspapers as the American defense industry supplies the increasing demand in the Middle East market for arms, he said, citing a recent article in The New York Times.

And it doesn't stop with arms sales. The army, Cramer said, is saying that the U.S. is going to be spending a long time in Iraq.