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What has Cramer so spooked about the markets? He said it's the S&P market oscillator, the one he's been using for decades to determine whether the market is overbought or oversold. When the oscillator goes above five, Cramer gets worried; above 10 and it's time to take profits.
Cramer admitted that sure, sometimes the oscillator isn't always right, and sometimes you will miss great deals, like the talk of a SanDisk (SNDK) and Micron(MU) - Get Report merger. But overall, the S&P oscillator will save your portfolio on countless occasions.
So while it appears that the markets only care about oil heading higher and the Chinese stock market doing the same, in reality the money managers are keeping a close eye on the oscillator, too, and the profit taking will come soon enough.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Carly Garner over the direction of crude oil.
Garner looked at a weekly chart of West Texas Intermediary crude prices, along with the CFTC commitment of traders (COT) report. She noted that while the COT doesn't paint a clear picture, traders own far fewer contract now than they did at oil's peak in August.
That said, Garner felt that oil's next move could be into the $60s, once it passes the ceiling of resistance at $50 a barrel.
Cramer also checked in with Carolyn Boroden for a second opinion, and Boroden, too, noted powerful resistance between $50 and $52 a barrel, but felt that $60 or even $70 could be possible if that resistance was broken.
Cramer concluded that while the near-term trend may be lower, oil prices over the long term appear to be a lot less worrisome, technically speaking, than most would have you believe.
Consider Occidental Petroleum
With oil prices likely heading higher, which oil stocks should investors be considering? Cramer recommended Occidental Petroleum(OXY) - Get Report , a stock he owns for his charitable trust, Action Alerts PLUS.
Cramer said Occidental's stock most closely tracks the price of crude among the major oil producers and it also sports a hefty 4% dividend yield that offers some downside protection.
In the balancing act that is high growth versus a strong balance sheet, Cramer said Occidental sits comfortably in the middle. The company still has a solid balance sheet, but also offers above-average growth potential, thanks to it's high quality assets in all of the world's most lucrative oil fields.
Occidental is also shareholder friendly, with 15 years of dividend raises. The company recently purchased 113 million shares of its own stock, which equates to nearly 4% of all shares outstanding.
Cramer said he's not recommending investors buy this stock right now because oil may be heading lower in the near term. But as the stock price falls, Occidental is among the most attractive in the oil patch and certainly one he's consider accumulating as it goes lower.
Know Your IPO
In his "Know Your IPO" segment, Cramer took a closer look at two biotech initial public offerings, CytomX Therapeutics(CTMX) - Get Report , which came public last week, and Strongbridge Biopharmaceuticals, which will be coming this week under the ticker SBBP.
Cramer said that while CytomX has promising prospects, it's simply too early to invest in this early-stage biotech. He said calling the company's products a pipeline is a stretch because it doesn't have any drugs in Phase I testing yet, only pre-clinical trials.
Strongbridge is another story, however. This company's endocrine disorder therapies are in Phase III testing and, if all goes well, its orphan drugs should have real pricing power. The IPO is expected at $18 a share. But Cramer said that price might not hold in our finicky market, which would only make him buy more if it heads lower than $18.
In the Lightning Round, Cramer was bullish on B&G Foods(BGS) - Get Report , Whole Foods Markets (WFM) , ConforMIS(CFMS) - Get Report , Stonemor Partners(STON) - Get Report and Eli Lilly(LLY) - Get Report .
No Huddle Offense
In his "No Huddle Offense" segment, Cramer suggested the Chinese selloff may be nearing an end. While it's true Chinese imports continue to be weak, he said, imports are not the only metric that matter.
One metric that matters, that no one is talking about, is a picking up in Chinese auto sales after a three-month decline. That, coupled with some rising commodity prices, may indicate China is finding its footing.
The Chinese stock market may eventually fall below the 3,000 level, Cramer concluded, but for now at least holding that level has to also be viewed as a positive sign.
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At the time of publication, Cramer's Action Alerts PLUS had a position in OXY.