Cramer's 'Mad Money' Recap: Riding the Business Cycle

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Everyone gets wrapped up in earnings, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. However, if people only focus on earnings, he bets they will lose money because they won't understand the market.

What he meant is that right now you need to look at the business cycle. Although this sounds boring and difficult, Cramer said understanding the business cycle is not really all that hard to do.

"The business cycle can eat you alive," he said. "If you learn how to ride out the business cycle the right way, you can make some mad money."

Cramer said that right now we are at the peak of the cycle and are headed down.

Walgreen (WAG Quote) is an example of a company where the business cycle matters much more than earnings. The company reported good numbers in March that were in line with expectations. However, despite the good numbers, the stock went down.

And it wasn't the only one to do so. The same happened to CVS (CVS Quote) as well, Cramer said.

"These stocks just don't work when the market is steamrolling," he said.

The turning point was on May 11 when the Fed tightened. Right after the tightening, Walgreen went back up, as did CVS and Rite Aid (RAD Quote), Cramer said.

That's how powerful the business cycle is, he said. It trumps everything.

The last time Walgreen reported numbers, they were fairly mediocre. But despite that, the stock went up. In Walgreen's case, people can see that earnings mean nothing, and the business cycle means everything, Cramer said, adding that Walgreen is not done going up.

"Opportunity is knocking," he said. "The economic macro shift we're seeing is big, and the stock could still go up this year." This is not because of Walgreen he reminded viewers, it is because of the business cycle. Walgreen is a buy, he said.