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NEW YORK (TheStreet) -- Too many people are betting against the markets, Jim Cramer told his Mad Money viewers Wednesday. The only problem is, these short-sellers have been dead wrong.

People forget that stocks can rally for a number of reasons. They can post great earnings, of course, but they can also bring out value by making a big acquisition or by breaking itself up into easy-to-invest-in pieces. Activists can also get on board and start shaking things up or the company could be acquired.

In the case of Intel (INTC) - Get Report, short-sellers were betting on continued sluggish PC chip sales. But while PCs did continue to slow, Intel didn't disappoint enough to scare off the buyers and that caught the shorts off guard, sending the stock up 4.2%.

The shorts have also gotten it wrong in the oil patch, where stocks like Concho Resources (CXO) - Get Report and Cimarex Energy (XEC) - Get Report continue to rally.

Nearly 36% of Shake Shack's (SHAK) - Get Report shares are currently sold short, yet that company also continues to defy logic, rallying 25% since its initial public offering.

But the king of the short-sell killers remains Netflix (NFLX) - Get Report, which despite running up hard going into its earnings still managed to amaze Wall Street with 63 million subscribers, news that sent shares up another 11.8% on the day. The shorts discovered just how wrong they were.

Alcoa Transformed

A star was born a week ago, but in a down market investors probably missed it. That star was Alcoa (AA) - Get Report, a company that has transformed itself, even if investors have yet to notice.

Back in 2008, Alcoa was an inefficient, high-cost producer of commodity aluminum that made it levered to the whims of global trade. Back then, no one cared about Alcoa -- and rightfully so because it had nothing exciting to say.

Fast forward to today and Alcoa has followed in the footsteps of PPG (PPG) - Get Report, DuPont (DD) - Get Report and Dow Chemical (DOW) - Get Report, the latter of which Cramer owns for his charitable trust, Action Alerts PLUS. All of these companies have successfully made the transition from making commodity products to making high-margin proprietary ones.

This was no easy task at Alcoa, but slowly the company was able to close high-cost plants while levering itself to red-hot markets like aerospace, tech and automotive, where it has been able to innovate to invent whole new categories of exciting products.

Alcoa is now an inexpensive stock, down 15% so far in 2015, as investors have yet to realize just how transformative these new products will be down the road. Cramer thinks it may take the markets a full six months to see the changes at Alcoa, but that gives smart investors time to get in now ahead of the move.

Advice for Google

It's time to play ball with the EU. That was Cramer's advice to Google (GOOGL) - Get Report, an Action Alerts PLUS holding, on how to deal with the anti-trust charges levied against.

Google may be in the right with how it operates its business, but in the end the truth might not matter. That's why it's imperative that Google follow the lead of Cisco Systems (CSCO) - Get Report, another AAP holding, and meet with EU leaders to engage with those countries and forge alliances and partnerships that create jobs and sway the tide of public opinion.

Google derives over half its revenue from overseas, so it could really be hurt by any interference by the EU.

Google could take the route that Microsoft (MSFT) - Get Report took in 2000 when it was charged with anticompetitive practices. The company was arrogant and combative, never really taking the charges against it seriously. In the end, that strategy backfired and Microsoft never really recovered.

Cramer hoped Google follow's Cisco's lead and not follow in Microsoft's footsteps.

Cramer's Homework

In his "Homework" segment, Cramer followed up on a few stocks that stumped him during earlier shows. He said the Canadian pipeline operator Pembina Pipeline (PBA) - Get Report was a good one, especially with shares down 30% as oil has declined. He said while Pembina is a good operator here in the U.S., Kinder Morgan (KMI) - Get Report, an Action Alerts PLUS holding, remains a great one.

Cramer was less enthusiastic on Springleaf (LEAF) - Get Report, which is in the process of merging with One Main Financial. He said a more straightforward investment would be MasterCard (MA) - Get Report, another stock he owns for Action Alerts PLUS.

When it came to Accelerate Diagnostics (AXDX) - Get Report, Cramer said this stock is little more than a super-speculative lottery ticket. The tiny biotech may someday have a breakthrough, but it currently makes no money and has revenue low enough that if it were a person it wouldn't even be in the top tax bracket.

Finally, there was Pattern Energy (PEGI) - Get Report, a stock Cramer actually liked, saying it reminded him of SunEdison (SUNE) , one of his alternative energy faves.

Lightning Round

In the Lightning Round, Cramer was bullish on Fiat Chrysler (FCAU) - Get Report, DuPont Fabros Technology (DFT) , Primerica (PRI) - Get Report, Wells Fargo (WFC) - Get Report, EOG Resources (EOG) - Get Report and Domino's Pizza (DPZ) - Get Report.

Cramer was bearish on Chesapeake Energy (CHK) - Get Report.

Am I Diversified?

In the "Am I Diversified" segment, Cramer spoke with callers and responded to tweets sent via Twitter to @JimCramer to see if investors' portfolios have what it takes for today's markets.

The first portfolio included Bank of America (BAC) - Get Report, General Growth Properties (GGP) , Ford (F) - Get Report, Apple (AAPL) - Get Report and Walt Disney (DIS) - Get Report.

Cramer blessed this portfolio as perfectly diversified.

The second portfolio's top holdings included Bristol-Myers Squibb (BMY) - Get Report, Johnson & Johnson (JNJ) - Get Report, Altria (MO) - Get Report, Mobileye (MBLY) and MeadWestvaco (MWV) .

Cramer said this portfolio needed to swap out Johnson & Johnson for an oil stock like EOG Resources.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL, CSCO, DOW, EOG, GOOGL, KMI, MA and WFC.