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NEW YORK (TheStreet) -- Sometimes this wacky market has a mind all of its own, Jim Cramer admitted to his Mad Money viewers Tuesday after another down day in the markets. Stocks used to make sense, Cramer said, but now the whole world seems upside down.
Cramer explained that for his entire career in the markets one mantra has held true: When interest rates fall, stocks rally. That only makes sense because bonds are competition for stocks. Sso as bonds pay less, money inevitably flows into the stocks.
But that hasn't been the case over the past few weeks, and the markets have been convinced that lower rates mean the economy is headed for recession. That's why today, once again, interest rates fell and the markets crumbled along with with them.
Cramer said the recession theory simply isn't true, and it's far more likely the Federal Reserve's tapering is helping to keep rates low. But that won't stop the pundits, who cite weak retail numbers from Staples (SPLS) and Dick's Sporting Goods (DKS), along with poor numbers from Caterpillar (CAT) as the only proof they need that the economy is stalled.
Cramer noted that Caterpillar's construction equipment business was actually up 17% for the quarter and only its mining equipment caused its weak numbers. But the markets will overlook look that, he said, along with the robust sales at Home Depot (HD) and all other positive market news.
Sometimes the market is just stupid, Cramer concluded, but that doesn't mean investors need to follow it.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carolyn Boroden over the charts of Apple (AAPL - Get Report) and IBM (IBM - Get Report), two stocks which Cramer owns for his charitable trust, Action Alerts PLUS.
Boroden has earned her stripes with Apple, Cramer said. She correctly called a bottom in the stock back in January at $535 a share. She also predicted a rally to $603 a share, a level which was reached today.
However, Boroden now sees Apple as vulnerable and prone to a short-term pullback after having retraced its prior move, a condition known as "extended." This is a strong pattern that was seen in Netflix (NFLX) after that stock's peak in March, and in LinkedIn (LNKD) more recently.
But while Apple is extended to the upside, Borodon felt IBM was extended to the downside. The stock met three Fibonacci ratios when it bottomed in February, she noted, and is now "extremely buyable."