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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.