Cramer's 'Mad Money' Recap: The Market's Wrecking Crew (Final)

Cramer said the market has been thrown in disarray by high-frequency flash traders who trade stocks like commodities.
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NEW YORK (

TheStreet

) -- "Guys in pajamas have hijacked our markets," Jim Cramer told a live studio audience on a special "Family Affair" edition of his "Mad Money" TV show Thursday.

He said high-frequency flash traders, which now make up 80% of all market volume, are the ones moving stocks, and they're focused on all the wrong data.

Cramer said the markets should've been crushed today on the heels of all the bad economic news, including dismal unemployment numbers and a Philly Fed Index showing disappointing economic activity in the mid-Atlantic. That, he said, coupled with the continued oil spill in the Gulf should have sent the markets plummeting. But they didn't.

Cramer said the reasons behind today's move are the flash traders, the "guys in pajamas" as he called them, that trade all stocks as commodities. "These guys don't own stocks," he said, "they don't even rent them." Instead, he said they merely hijack them for a few hours, or sometimes minutes, to do their bidding, then dump them back into the pool.

What were the flash traders looking at today that made them so bullish? Cramer said it's the euro, as seen in the

CurrencyShares Euro ETF

(FXE) - Get Report

. Cramer said the flash traders are trading off that single chart, not realizing that a strong euro only comes on the heels of a limp U.S. economy.

"These guys are betting on the wrong things," said Cramer, and it will eventually come back to bite them. He pleaded for members of Congress, like Senator Ted Kaufman (D., Del) who appeared on "Mad Money" Wednesday, to bring back integrity and parity to the markets by reigning in flash trading.

Mighty Apple

With shares of

Apple

(AAPL) - Get Report

, a stock which Cramer owns for his charitable trust,

Action Alerts PLUS, hitting a new 52-week high, is the stock overvalued? Cramer says "not a chance."

Cramer said simply that Apple is just unstoppable, and as it increases its own valuation, it's also destroying value at its competitors. Since the company launched it's iPad earlier this year, Cramer said competitors

Amazon.com

(AMZN) - Get Report

,

Adobe

(ADBE) - Get Report

,

Hewlett-Packard

(HPQ) - Get Report

and

Dell

(DELL) - Get Report

have lost $456 billion in market cap.

Since launching the iPhone, traditional phone makers

Nokia

(NOK) - Get Report

and

Motorola

(MOT)

have been in a tailspin, losing $96 billion in market cap.

And even in the smart phone space, new and established competitors like

Research in Motion

(RIMM)

,

Palm

(PALM)

and

Google

(GOOG) - Get Report

have lost $40 billion in their combined valuations.

Cramer said for those good at math, these loses total $192 billion in lost market cap. During the same time, Apple has seen its market cap increase by $139 billion. Cramer said that leaves $53 billion of missing market cap, market cap which he feels Apple will make up for as the stock continues higher.

Hot Shoes

"Footwear has been on fire," Cramer told viewers, but is it time to be walking towards the exit? How much longer can it last? Cramer dove back into the group to find out.

Cramer said there's no denying that footwear has been a winner, with stocks like

Deckers

(DECK) - Get Report

up 332% from its 2009 lows,

Sketchers

(SKX) - Get Report

up 698%, and

Steve Madden

(SHOO) - Get Report

up 292%. Even show giant

Nike

(NKE) - Get Report

, he said, is up 93%.

Cramer said the positive momentum at Sketchers is palpable, thanks to the company constantly reinventing itself, creating new products that consumers can't get enough of. The latest has been the toning shoe, a new category that promotes fitness, and a category Sketchers now owns 50% of.

Cramer said the toning show category represents a $4.6 billion opportunity for the show industry, which is why Sketchers' Shape-Ups shoes already represent 10% to 15% of company sales. It's also why Sketchers is expanding its toning shoe line up from one to four product lines later this year.

Sketchers delivered strong earnings when it reported last, beating estimates by 12 cents a share on a 44% increase in revenue. With shares trading at just 12 times next years' earnings, estimates which Cramer said are too low, the stock of Sketchers is a steal.

Q&A

In a special "Family Therapy" segment, Cramer took questions from audience members. He told one young viewer that he should not be investing in Real Estate Investment Trusts at such a young age, he should be looking for higher growth stocks, like his C.A.N.D.I.E.S. stocks he featured earlier this week.

Likewise, Cramer told another young viewer that he should not feel bad about speculating. "You need to get excited about the markets," he said, and sometimes that means making some riskier trades.

Lightning Round

Cramer was bullish on

Linn Energy

(LINE)

,

Netflix

(NFLX) - Get Report

,

Citigroup

(C) - Get Report

,

International Business Machines

(IBM) - Get Report

,

EV Energy Partners

(EVEP)

,

Kinder Morgan Energy Partners

(KMP)

and

Hot Topic

(HOTT)

.

He was bearish on

Covidien

(COV)

,

Corning

(GLW) - Get Report

,

Exxon Mobil

(XOM) - Get Report

and

Research In Motion

(RIMM)

.

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

To watch replays of Cramer's video segments, visit the Mad Moneypage on CNBC

.

Want more Cramer? Check out Jim's rules and commandments forinvesting from his latest book by

clicking here.

For more of Cramer's insights during the Lightning Round, clickhere

.

At the time of publication, Cramer was long Apple.

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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