Cramer's 'Mad Money' Recap: Send the Defense on the Field

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Even though the market was up today, Jim Cramer said on his "Mad Money" show Wednesday evening that investors need to be taking cues from what was down: commodities such as oil, copper and gold.

Inflation peaked Wednesday with the spike in the producer price index, Cramer said. But he said investors should no longer be focused on inflation; they need to keep an eye out for recession. Although we're not in recession mode just yet, he warned that we are in deacceleration mode.

Crude oil also wasn't immune from the commodity hit. "It just got too expensive," Cramer said. "All the commodities got too expensive."

As commodities cool off, Cramer said it's time to take profits in Phelps Dodge (PD Quote) and Valero Energy (VLO Quote).

And what to do as the economy takes a breather? Cramer recommended purchasing stocks that can make money even if the economy's in a pinch, such as Google (GOOG Quote), Yahoo! (YHOO Quote), Altria (MO Quote) and Procter & Gamble (PG Quote). He also likes UnitedHealth Group (UNH Quote), Syneron Medical (ELOS Quote), Humana (HUM Quote) and Zimmer Holdings (ZMH Quote).

Shed These Clothes

Cramer was dour on retailers, though, and said to stay away from stocks like Abercrombie & Fitch (ANF Quote), American Eagle Outfitters (AEOS Quote), Pacific Sunwear (PSUN Quote) and Urban Outfitters (URBN Quote).

Above all, make sure you're diversified, Cramer said -- if you are, your portfolio will be fine during this defensive period.

Because Cramer likes tech, a caller asked which tech stocks will do well, and which will do poorly, in the downturn. Cramer said to pay attention to whose products are hot, such as Apple Computer (AAPL Quote), SanDisk (SNDK Quote), Skyworks Solutions (SWKS Quote), Intel (INTC Quote) and Microsoft (MSFT Quote).

Another caller wanted to know what specific indicators Cramer sees that indicate the cycle for oil and natural gas is over, and that it's time to get out.

"This has a lot to do with discipline. ... When oil represented 5% of the S&P 500, I made a mental rule. When it doubles to 10%, I am going to pull back regardless of where oil is, regardless of where the earnings are, regardless of where the stocks are. ... The bottom line is, we got there this week. We have to ring the register."