There's a way for investors to predict huge one-day rallies like Tuesday's 889-point gain in the Dow Jones Industrial Average, Jim Cramer told the viewers of his "Mad Money" TV show. And that is to use Apple ( AAPL) as a barometer to get a sense which way the market is heading, he said. While there was a plethora of positive news today, including the end of the strike at Boeing ( BA), positive moments in Asia and Hong Kong and rumors of a U.S. and European interest rate cut, Cramer said Apple is the true litmus test for the market. Simply put, Apple has the best fundamentals, the best balance sheet and the best growth of just about any company, said Cramer. That's why if Apple's stock price is falling, the markets are clearly headed lower. Apple's most recent quarterly results were simply a thing of beauty, he said, with the company reporting $1.26 a share against the analysts' estimate of $1.11. The company also announced that it sold more than 6 million iPhones in the quarter, making it now the third largest supplier of cell phones in the world. Yet Apple trades just 15 points from its 52-week low at 14 times its earnings compared to the 40- to 50-multiple it has fetched historically. The company has $24.5 billion in cash, which equates to almost 30% of its current share price. But Cramer said the takeaway from Apple is not that it's a solid performer or that the stock is cheaper than any growth stock he's ever seen. Cramer said the real takeaway is that Apple is now the barometer for the market. "When Apple goes higher, the rest of the market comes with it," he said.
Cramer: Can't Trust a Rally