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Get used to having some down days, Jim Cramer told his Mad Money viewers Thursday. Detours are a natural part of the stock market, Cramer said, and we won't get to Dow 20,000 without them.
Today's bearishness was led by retail, where Bed Bath & Beyond (BBBY) - Get Report delivered a scant 85 cents a share in earnings compared to analysts' expectations of 98 cents. For those betting on a housing comeback, the news caused a cascade of weakness across the sector.
Technology also had a down day with Red Hat (RHT) - Get Report plunging 13.8%, a big decline for a normally consistent earner. The only upside in tech was Micron Technology (MU) - Get Report , which soared 12.8%.
Is this news enough to begin repealing some of our post-election gains? Cramer thought not, as the financials have mostly led this market higher and they are still in solid shape.
Cramer and Jack Mohr are telling the members of their investment club to scale into names they like for the long term, and they're focusing on HP Enterprises (HPE) - Get Report . Read more with a free subscription to Action Alerts PLUS.
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Executive Decision: Red Hat
For his "Executive Decision" segment, Cramer dug deeper into the decline in Red Hat shares, by checking in with Jim Whitehurst, the company's president and CEO, to learn more.
Whitehurst said that he's not surprised by the market's reaction to this quarter's earnings. He said Red Hat's stock typically trades on the company's billing metrics. But he also noted that he's cautioned investors before that billings can be volatile for any given quarter.
In the case of his quarter, Whitehurst said, a couple of large government deals did not close as a result of the changing leadership. He expects those deals to close next quarter. Overall, Whitehurst said he was happy with his company's performance this quarter and remains optimistic for next quarter.
Whitehurst also commented on his CFO leaving the company, saying that while the timing isn't perfect, it was expected. He also said that Red Hat is bullish about the Trump administration, as both defense and intelligence spending should be on the rise.
Cramer said that despite today's weakness, Red Hat has a great long-term model.
Coming up on this episode of Mad Money: Cramer goes "Off the Tape" with Walt Freese, CEO of Sterling Rice Group. Plus, a little fireside chat with readers; And don't miss the Lightning Round.
Who's Minding the Mountain?
Why isn't the potential collapse of Italy's oldest bank, Monte dei Paschi, sending the world's markets sharply lower, as similar European banking problems have in past? Cramer explained that there are several reasons.
First, the problems this time around come as no surprise: This has been a zombie bank since 2010, with bad loans totaling an astounding 38%. In this case, a state takeover of Monte dei Paschi would be viewed as a good thing, and a much-needed first step in resolving the country's problems.
But mainly, Cramer said, the reason this bank failure is different than the rest is that there is no risk to U.S. banks, as years of responsible regulation have our banking system better capitalized and able to handle such disruptions. While Italy is only just beginning its reforms, the U.S. has all but completed its.
In a special holiday "Fireside Chat" segment, Cramer answered a few questions from viewers. He said that Action Alerts PLUS holding Citigroup (C) - Get Report is going higher and he would hold onto it for the long run.
In the Lightning Round, Cramer was bullish on Southwestern Energy (SWN) - Get Report , UnitedHealth Group (UNH) - Get Report , IBM (IBM) - Get Report , U.S. Concrete (USCR) - Get Report , Bluebird Bio (BLUE) - Get Report , Celgene (CELG) - Get Report , Allergan (AGN) - Get Report and Ashland (ASH) - Get Report .
Off the Tape
In his "Off The Tape" segment, Cramer spoke with Walt Freese, CEO of the privately-held Sterling Rice Group, a consulting firm with its finger on the pulse of natural and organic food trend.
Freese said that 2017 will see the mainstreaming of the natural and organic trend, with 57% of all organic products being sold through conventional channels for the first time. That trend may spell trouble for the likes of Whole Foods Market (WFM) , which will now have more competition.
Freese said that millennials are not only more focused on the quality of organic items, but they're also more willing to experiment with different types of foods and different ways of cooking them.
As for the big food companies, Freese said it's no longer enough to just acquire smaller organic brands, these companies must also pay attention to their core brands and work to remove artificial flavors and colors and use more natural ingredients.
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At the time of publication, Cramer's Action Alerts PLUS had positions in HPE, C and AGN.