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Jim Cramer's 'Mad Money' Recap: Lost in the Rotation

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NEW YORK (TheStreet) -- The action in the markets might seem downright laughable, with stocks up big one day only to falter the next, Jim Cramer said on "Mad Money" Wednesday. But with different investors focused on different things, it actually all makes perfect sense.

Cramer explained that some investors focus only on commodities for their market outlook, and commodities have been in trouble of late as fears ripple around the world that China may be slowing faster than expected. This sudden move in commodities, as seen by the iPath Dow Jones Copper ETF (JJC), has investors spooked, Cramer said.

Then there are those investors who focus only on the geopolitical landscape. Those investors worry about the Ukraine and a compromised Europe.

Still other investors focus on individual stocks, where things are indeed looking a lot more rosy. Cramer said restaurants like Starbucks (SBUX) do better when commodities fall, while cloud stocks like Yelp (YELP) have absolutely nothing to do with Ukraine or Europe.

Cramer said these cross-currents are called rotation, and it's something big money does on a regular basis. The gyrations may seem maddening to those with longer-term views, which is why Cramer said those investors need to stay diversified to sidestep the big moves to the downside.

Executive Decision: John Schiller

For his "Executive Decision" segment, Cramer talked with John Schiller, chairman and CEO of Energy XXI (EXXI - Get Report). Cramer last spoke with  him Monday on location in the Gulf of Mexico. Energy XXI just announced the acquisition of EPL Oil & Gas (EPL), news that sent shares down 7.8% and spurring Cramer to follow up.

Schiller said EPL has four billion barrels of reserves that it has yet to tap; with Energy XXI's technology, that number could bump by another 5%.

When asked about the deal, which issued more stock, Schiller defended the move saying that deals like EPL don't stay around long and investors will see great results soon enough.

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