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) -- "We need to vanquish all hope from this market," Jim Cramer told

"Mad Money"

viewers Tuesday.

Only then can investors safely start buying the sectors that are working.

Cramer explained that the markets remain divided, with some investors feeling a deal on the so-called fiscal cliff will be reached in time while others are expecting the worst.

That makes for a volatile market, said Cramer, one that can give big gains one day but take them away the next, as was seen by the likes of

Darden Restaurants


, down 9.5% Tuesday, and

Gap Stores


, down 10%.

Hopes were high just last week that a budget compromise could be reached, said Cramer, but over the past 72 hours those hopes appear to be fading. Some investors feel the whole fiscal cliff debacle is being overdone, while others feel we'd be better off with the mandatory taxes and spending cuts.

Cramer continues to believe the cliff is indeed a big deal and one that must be avoided at all costs.

But until all hope is lost and widespread fear sets in, Cramer said it may be too risky to buy any of the growth stocks he recommended on Monday's show, including



Ulta Salon



When all hope is vanquished however, Cramer said not only can those growth stocks be bought, he'd also recommend the autos, including

Ford Motor


, and the housing stocks, such as

Toll Brothers


. Toll told investors today that new home formation cannot be kept artificially low forever.

Off the Charts

In the "Off The Charts" segment, Cramer went head to head with colleague Ed Ponsi over the chart of the retail sector to figure out why this group has been exploding at a time when the markets are less than a month away from higher taxes, the expiration of unemployment benefits and what will surely be a huge squeeze on the American consumer.

Using a daily chart of the

Market Vectors Retail Index


, Ponsi noted that the retail group bottomed on Nov. 21 and has been on fire ever since. He said that bottom point represented a 50% retracement of the sector's previous rally and the MACD momentum indicator also predicted the swing to the upside.

Ponsi also went further, using an hourly chart to note that the retail stocks are now just 1% below their all-time closing highs, meaning there will be little resistance to the upside. He suggested adding to a position in the group if it either pops above $46 or pulls back below $45.

Cramer was skeptical of this view, however. He said while the retail group has been resilient, he's worried about individual company blowups, as seen in



or Gap today. He said losses from these names would undo any upside seen in stronger names like

Home Depot



The Future of Starbucks

Investors have lots of questions about the future at



, Cramer told viewers, but the company's analyst meeting is Wednesday so those questions will soon have answers. He said this company's bi-annual meeting is an important one as Starbucks made good on all its promises from 2010 and should have a promising roadmap through 2014.

Cramer expects to hear how the U.S. market is doing, a market that still accounts for 75% of company sales. He also expects to hear about international sales, including Europe and China as well as the company's debut into India. There are also questions surrounding Starbucks' single-serve k-cup business and how that relates to its new Verismo line of single-serve brewers.

In addition, there is Starbucks' proposed merger with


( TEA), which is steeped in controversy, causing a field day for the short-sellers.

Starbucks has plenty of room for growth, both domestically and abroad. The company is also flush with cash. Cramer said with the price of coffee now 30% off its highs there are many things going right for this company, which currently trades at just 23.8 times earnings with a 19% growth rate.

Lightning Round

In the Lightning Round, Cramer was bullish on




Sprint Nextel



Kinder Morgan Energy Partners



Linn Energy






Berkshire Hathaway






Cramer was bearish on

Toyota Motor



Capital Product Partners



Executive Decision

In the "Executive Decision" segment, Cramer sat down with Russell Goldsmith, chairman and CEO of

City National


, a Los Angeles-based business bank that also offers wealth management services.

Goldsmith said that many of City National's customers fall into two camps when it comes to the looming fiscal cliff. He said that many are simply sitting on their hands, not hiring, not investing and not borrowing. Uncertainty breeds caution, Goldsmith noted, which is why many are waiting to see what the new rules will be before moving forward.

But a few customers see opportunity, even in an uncertain market, and City National has been making loans to those customers, primarily in the technology and entertainment sectors.

Goldsmith also commented on California's growing economy. He said his state is now number one in job creation and unemployment is finally coming down thanks to some budget stability at the state level. You can't have an American recovery without California, Goldsmith continued.

Turning back to the business at City National, Goldsmith said his bank continues to have a strong balance sheet and has been making smart acquisitions to bolster its already strong wealth management business. He expects the U.S. economy to pick up in the second half of 2013.

Cramer continued his recommendation of City National, one of the few growth banks he follows.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer reminded viewers that things are only relevant until they aren't.

He said that at this time last year the markets were embroiled in Europe's sovereign debt woes, troubles that, it was thought at the time, would never end. But they did. The European Central Bank hammered out a grand compromise, banks raised cash and the countries themselves forged the budgets thy needed to regain their footing.

That's why

Banco Santander


, which traded just above $4 a share this time last year, is now worth almost $8 a share today, because the crisis has largely passed, he said.

Fast forward to today, when the U.S. is having its "Santander" moment, taking stocks like



, a stock Cramer now owns for his charitable trust,

Action Alerts PLUS, from almost $10 a share to now down below $8. Cramer said there's nothing wrong with KeyCorp other than being based in the U.S.

Be prepared to buy when everyone else is selling, Cramer concluded.

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-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here:

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At the time of publication, Cramer's Action Alerts PLUS had a position in KEY, KO and SBUX.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.