The stock market needed to sell off, Jim Cramer told his Mad Money viewers Wednesday, but it's still too early to start buying. That's because stocks are still too frothy and the selling likely won't end until at least late Thursday.
What does froth look like? Cramer singled out vaccine maker Novavax (NVAX) - Get Novavax Inc. Report, who appeared on Wednesday night's show, as one example. Novavax has rocketed from $18 to $40 a share in just two days, making stocks like Pfizer (PFE) - Get Pfizer Inc. Report and Johnson & Johnson (JNJ) - Get Johnson & Johnson Report the safer stocks to own.
Then there are the banks. Stocks like Wells Fargo (WFC) - Get Wells Fargo & Company Report may seem enticing, but with low interest rates on deposits and a wave of defaults coming, the last thing you want is credit risk going into a recession, Cramer cautioned. A safer stock would be PayPal (PYPL) - Get PayPal Holdings Inc. Report, which had strong earnings and far less risk.
The airlines may look attractive, but with business travel drying up and airlines owing the government a lot of money, their outlook looks grim as well. The same goes for oil. Very few oil producers can make money with crude at these prices. Cramer recommended only Chevron (CVX) - Get Chevron Corporation Report.
The same applies to REITs, retail, restaurants, the industrials and countless other sectors of our economy, Cramer said. Everything hinges on a vaccine, but a vaccine is still 12 to 18 months away -- the same time estimate we heard two months ago.
The only stocks that are safe to buy are those in Cramer's COVID-19 Index, those that thrive in the stay-at-home economy. But even then, Cramer said, he would wait until late Thursday before starting a new position.
Executive Decision: Cisco Systems
In his first "Executive Decision" segment, Cramer spoke with Chuck Robbins, chairman and CEO of Cisco Systems (CSCO) - Get Cisco Systems Inc. Report, the network equipment provider that delivered strong guidance and raised their guidance.
Robbins said the entire world transitioned to working from home in record time and Cisco's Webex conferencing platform tripled in size almost overnight. The company's VPN and security software were also in high demand.
When asked whether the work-from-home trend is here to stay, Robbins said companies will certainly be reevaluating their hiring practices and their real estate footprints going forward. There's no doubt that some workers can stay at home, while others will likely transition to a hybrid model.
Cisco is doing their part to help fight the COVID-19 pandemic. The company has donated $300 million to the global fight and is providing video conferencing systems for hospitals to help with patient intake and provide ways for patients to communicate with their families.
Turning to the company's outlook, Robbins said Cisco is working hard to improve gross margins, which was evident this quarter, and is generating 50% of its revenue from software and services as planned.
Executive Decision: Public Service Enterprise Group
For his second "Executive Decision" segment, Cramer also spoke with Ralph Izzo, chairman, president and CEO of Public Service Enterprise Group (PEG) - Get Public Service Enterprise Group Incorporated Report, the electric utility with a 4.4% yield.
Izzo confirmed what other utilities have been saying this quarter, that the demand for residential power is up, while commercial and industrial demand has fallen. However, since residential electricity carries higher margins, the declines were not as bad as many had feared. Izzo noted that they only have one month's worth of data and they'll know more with another cycle of data.
When asked about their commitment to the environment, Izzo said that emitting carbon costs money and they're doing everything they can to reduce it. He doesn't expect our country will embrace new nuclear power plants, but offshore wind is becoming a compelling option.
One area of concern for Izzo was COVID-19's impact on the upcoming storm season. He said typically, utilities share personnel to recover from storms faster, but with COVID-19, utilities are reluctant to share their workers and possibly put them in harm's way. That could lead to far longer wait times before power is restored after a storm.
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Off the Charts: Semiconductors
In his "Off The Charts" segment, Cramer checked in with colleague Bob Lang over the charts of the semiconductor makers to see if Advanced Micro Devices (AMD) - Get Advanced Micro Devices Inc. Report, Nvidia (NVDA) - Get NVIDIA Corporation Report and Qualcomm (QCOM) - Get QUALCOMM Incorporated Report are worth buying.
Lang was impressed with the daily chart of Nvidia, noting the stock's April breakout to new highs. The stock's Ichimoku cloud is in the green, trending higher and expanding, all signaling strong momentum. The MACD, another momentum indicator, just saw a bullish crossover confirming the stock's strength.
Turning to a daily chart of AMD, Lang noted that stock's pattern of higher highs with higher lows as well as positive momentum indicators. He felt AMD's recent decline made for a terrific entry point.
Finally, Lang looked at a daily chart of Qualcomm. Here he noted a positive relative strength indicator and MACD, both of which signal this 5G wireless chipmaker are nowhere near overbought.
Don't Forget the Cruisers
In his "No-Huddle Offense" segment, Cramer told investors that despite the recent selloff, they shouldn't forget about why the market has been rallying. Things are indeed looking up for ever the most beaten-down of sectors.
Take the cruise lines. They're not even allowed to operate right now, but Royal Caribbean (RCL) - Get Royal Caribbean Group Report just issued $3.3 billion in bonds to shore up its capital position. The company followed rival Norwegian Cruise Line Holdings (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report, which recently offered 41.8 million shares of stock at $11 a share. Meanwhile Carnival Corp. (CCL) - Get Carnival Corporation Report was able to take advantage of government programs to finance its continued operations.
If the cruise lines, an industry at the heart of the COVID-19 blast zone, are able to survive, that's great news for everyone else.
Here's what Jim Cramer had to say about some of the stocks that callers offered up during the Mad Money Lightning Round" Wednesday evening:
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At the time of publication, Cramer's Action Alerts PLUS had a position in JNJ.