Cramer's 'Mad Money' Recap: Sept. 2

Despite today's selloff, Cramer cited several positive signs that point to a market rally in the horizon.
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"The rally this morning was the real deal," Jim Cramer told viewers of his "Mad Money" TV show Tuesday.

He said that market expectations have turned too negative and when companies report their earnings they should blow away those estimates. Cramer said he was buying into today's afternoon selloff for his charitable trust

Action Alerts PLUS and said now is the time to start building positions.

Cramer told viewers not to pay any attention to the Dow Jones Industrial Average, which traded as high as 230 points before closing down 26.63 points today.

Instead he said they should concentrate on the KBW Bank Index and Philadelphia Housing Sector Index, which he says are the real indicators of where the market is headed.

He said the markets will not see a meaningful rally with the Philadelphia Housing Sector Index in free fall. "The markets need home prices to stabilize," he said.

Cramer reiterated his views that the markets will not re-test the lows of July 15, noting his prediction of a bottom in the housing market is now just 302 days away. He said a market rally will likely precede that bottom.

Cramer cited several reasons why he feels a market rally is on the horizon. First, there will be an uptick in consumer spending when gasoline hits just $3 a gallon. Second, the Federal Reserve won't raise interest rates as long as commodity prices continue to fall.

Finally, any companies who raised prices due to higher commodity costs will now reap the rewards as those commodities begin to recede in price.

Cramer: Browser Added to Google Empire

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Cramer told viewers not to wait until next year to start buyer, as a recent Wall Street Journal article suggested, but rather to start buying now ahead of the positive news that's on its way.

The Future of Natural Gas

Cramer talked with

Clean Energy

(CLNE) - Get Report

president and CEO Andrew Littlefair about his company's outlook as interest in natural gas as an alternative fuel heats up ahead of the November elections.

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Littlefair said that passage of Proposition 10, a California ballot initiative, will devote $3 billion to alternative fuels, signaling a boon for not only his company, but also for the entire alternative fuel industry. He said that this one initiative alone could displace as much as 1.5 billion gallons of gasoline and diesel fuel a year.

Littlefair said that while he sees ethanol as an important step towards alternative fuels, only natural gas in its liquified or compressed forms, can deliver the big numbers needed to reduce the country's need for foreign oil.

When asked about the current political environment for natural gas, Littlefair said that for many years politicians felt the U.S. was running out of the commodity. But now, with many recent large gas discoveries, that is just not the case, he said.

Comparing apples to apples, Littlefair said natural gas currently retails for just $2.60 to $2.70 a gallon as opposed to $4 a gallon for gas. But despite this significant cost reduction, he feels it will be the heavy trucks and large fleets that will convert first, with consumer autos following suit.

Cramer told viewers it makes sense to invest in Clean Energy if they believe as he does that natural gas is the wave of the future.

Media Overkill

Cramer said he's reluctantly giving the boot to drug maker

Schering-Plough

(SGP)

, a stock which he owned for his charitable trust

Action Alerts PLUS, but not for the reasons investors might think.

While Cramer admitted that the company's anti-cholesterol drug Vytorin does have problems, he said it's the onslaught of press coverage that's made the stock 'radioactive' and one that needs to be avoided.

According to Cramer, the press coverage on Vytorin has been worse than the side effects of drug itself. At last count, he said, one reporter alone at the New York Times has written 10 negative articles so far this year. Cramer said he now feels the Food and Drug Administration will likely bow to public pressure and ban the drug.

Cramer said he's not afraid to be under fire, or to stick his neck out against prevailing opinions. In the case of Schering, though, the stock has just become 'radioactive' and can't be touched until a decision by FDA on Vytorin has finally been made, he said.

Mad Mail

In this segment, Cramer told a viewer that he's tempted to start a position in

Corning

(GLW) - Get Report

and feels the stock has been over done to the downside.

Lightning Round

Cramer was bullish on

Foster Wheeler

(FWLT)

,

United Parcel Service

(UPS) - Get Report

,

St. Joe

(JOE) - Get Report

and

Freeport-McMoRan

(FCX) - Get Report

.

He was bearish on

CH Robinson Worldwide

(CHRW) - Get Report

,

Citigroup

(C) - Get Report

and

SanDisk

(SNDK)

.

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At the time of publication, Cramer was long on Foster Wheeler, Schering-Plough and Freeport McMoran.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com 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 TheStreet.com, 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 TheStreet.com is related to the specific opinions expressed by him on "Mad Money."

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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 TheStreet.com. 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 TheStreet.com, 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.