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Everyone gets wrapped up in earnings, Jim Cramer told viewers of his "Mad Money" TV show Tuesday. However, if people only focus on earnings, he bets they will lose money because they won't understand the market.

What he meant is that right now you need to look at the business cycle. Although this sounds boring and difficult, Cramer said understanding the business cycle is not really all that hard to do.

"The business cycle can eat you alive," he said. "If you learn how to ride out the business cycle the right way, you can make some mad money."

Cramer said that right now we are at the peak of the cycle and are headed down.

Walgreen ( WAG) is an example of a company where the business cycle matters much more than earnings. The company reported good numbers in March that were in line with expectations. However, despite the good numbers, the stock went down.

And it wasn't the only one to do so. The same happened to CVS ( CVS) as well, Cramer said.

"These stocks just don't work when the market is steamrolling," he said.

The turning point was on May 11 when the Fed tightened. Right after the tightening, Walgreen went back up, as did CVS and Rite Aid ( RAD), Cramer said.

That's how powerful the business cycle is, he said. It trumps everything.

The last time Walgreen reported numbers, they were fairly mediocre. But despite that, the stock went up. In Walgreen's case, people can see that earnings mean nothing, and the business cycle means everything, Cramer said, adding that Walgreen is not done going up.

"Opportunity is knocking," he said. "The economic macro shift we're seeing is big, and the stock could still go up this year." This is not because of Walgreen he reminded viewers, it is because of the business cycle. Walgreen is a buy, he said.

It's Not the Season, It's the (Mining) Sector

It may be earnings season, but Cramer said he is not paying attention to them because we're in the beginning of an economic downturn. In an economic downturn, it's not the earnings that count, but the stock's sector, he said.

Cramer told his viewers that they will need to do some selling in sectors that do not perform well in this climate. Although companies in these sectors might report great numbers, Cramer said they will get crushed.

He said even though he likes Freeport-McMoRan Copper & Gold ( FCX), he doesn't believe it is going to work right now. By Cramer's estimation, the company should report the single best quarter of any mining company, and that according to Citigroup, it has the most compelling gold mine on Earth.

The stock is already up 54% for the year, and it's coming down, Cramer said. People are going to pay far less for its upside surprise, given where we are in the cycle, he said. It has reached its peak.

Even though Cramer doesn't consider Freeport an American company, the market is going to treat it like an American company, he said. In the case of any American mining company, Cramer believes you should sell and be done with it. The business cycle is so powerful it should take down any mining company, he said.

Once the smoke clears, he said he believes Freeport will make a lot of money, and it will be a buy. It might even be a takeover target. But for now, stay away from it.

Best of the Worst

In a slowing economy, defenseless stocks are not the right place to be, Cramer said. The Nasdaq stocks have been getting hit practically every day, and tech has been getting killed until today, he said. They have been hurt the most.

But they are not getting hit because they are bad, Cramer said, but because they are easy to knock down and are vulnerable.

It's been worse in the Nasdaq because those stocks don't have any defense against the economy. Defense refers to dividends, acquisitions and buybacks, and tech stocks don't have these three elements.

But when they rally like they did today, you should sell a little, Cramer advised.

Apple ( AAPL), which is the best of these companies, is also a defenseless stock to be cautious of. Cramer said it is a great company, but has continued to get clocked because it's defenseless. And it still might go down, he added.

Apple doesn't give guidance; it doesn't have dividends or buybacks. Without guidance, there is no defense against rumors, and rumors can lead to stock selling, he said. In this case, intrinsic worth does not matter.

Apple's situation is not unique. It is happening to other defenseless companies as well, Cramer said. When they go up, you have to give up a little. Now is not the time to play tech stocks, he said.

Ultimately, Apple will bottom, but it hasn't yet. Until then, be cautious, he warned.

"Apple is turning into applesauce, and I can't have that happen to you," he said.

Explosive Prospects for Dynamic Materials

Cramer welcomed Dynamic Materials ( BOOM) CEO Yvon Pierre Cariou to the show and asked him to explain what explosion-weld clad metals are and where his company fits into the economy.

When you build capital equipment for oil and gas refining and the big reactors become too big and thick, solid metal becomes too expensive, and people begin to switch to clad metal, Cariou explained.

When Cramer asked where people could find more information on Dynamic's prospects, Cariou said since the company's controlling shareholder has departed, Dynamic will have more analysts following it.

Referring to the company's competition, Cariou said, "We have a tremendous market share and are the only global player in our niche market. There is a smaller Japanese competitor, but they stay local."

This is not a large-cap company, Cramer said, adding that even though it is up a lot, it has a lot more room to grow. It has great prospects and a great business, and he believes the stock will go higher, even though the economy is slowing, he said.

To view Cramer's interview with Cariou, please click here .

Lightning Round

Cramer was bullish on Ashland ( ASH), LifeCell ( LIFC), ITT Educational ( ESI), Alcan ( AL), Foster Wheeler ( FWLT), News Corp. ( NWS), Lockheed Martin ( LMT), General Dynamics ( GD), Panera Bread ( PNRA), Starbucks ( SBUX), Whole Foods ( WFMI) and Harley-Davidson ( HDI).

Cramer was bearish on ( CRM), Career Education ( CECO), Alcoa ( AA) and Marvel Entertainment ( MVL).

For more of Cramer's insights during the most recent Lightning Round, click here .

Here's your chance to pick the stock you'd like me to feature on my radio show July 13:
DJ Orthopedics
Freeport McMoRan
General Dynamics
Home Depot

REMEMBER to listen in on Thursday for my take on the stock that wins this poll!

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.
At time of publication, Cramer was long Alcan and Foster Wheeler.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on Mad Money are his own and do not reflect the opinions of 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, 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 is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.

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