Cramer's 'Mad Money' Recap: A Market Driven by Fear (Final)

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"The market's should've been down today," Jim Cramer told the viewers of his "Mad Money" TV show Friday.

After predicting a selloff and telling viewers to take profits on Thursday, Cramer told viewers there's a good reason why the markets rallied so unexpectedly.

Cramer said the markets should've been down today after Microsoft ( MSFT), Amazon.com ( AMZN) and American Express ( AXP) all reported disappointing earnings after a huge runup over the past two weeks.

Where did the strength come from? Are companies doing better than we thought?

Cramer said absolutely not. The earnings at Microsoft, Amazon and American Express were horrible, he said. Companies are not healthy, he said, adding they just fire a lot of people in order to make their numbers. He said the market's resilience came from professional money managers.

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Cramer explained that professional fund managers are under incredible pressure to both outperform the markets, and each other, and that means being fully invested when the markets are headed higher, like they are now.

If they're not fully invested, he said, managers fall behind the averages and lose their jobs. Thus on weak days like today, there's fear and panic, but not fear that the market's are going down, but rather fear that the market's are going up without them.

Cramer said investors can see the fear by watching the pundits on TV. They were the first to predict doom and gloom today, he said. That's because these fund managers meed the market lower, so they can buy more cheaply, he said. These managers, said Cramer, can't afford to sell, and they can't afford not to buy.

Starbucks Turnaround

"At long last, the turnaround at Starbucks ( SBUX) has begun," Cramer told his viewers. After years of languishing, Cramer said the stock is finally ready to head higher.

Cramer said the situation at Starbucks is a familiar one. He said that growth stocks that reach their peak often take years to attract a new class of investors, the value investors. But now that the value investors are here, the stock can head higher.

But there's more to the Starbucks story than just the investor base. He said there's a real turnaround afoot. With the return of CEO Howard Schultz, the company is focused on profits, not sales, and is doing a remarkable job. The company has already closed 800 unprofitable stores and removed an estimated $700 million from its cost structure.

In addition to cost cuts, the company is also redoubling its efforts to focus on its customers by remodeling stores, introducing new products, and reinventing its instant coffee brand.

Cramer said Starbucks is akin to the McDonald's ( MCD) turnaround in 2003, which also saw cost cutting, remodeling stores and a new focus on the customer. He said the bottom line is that the turn is for real, and the stock has a lot more to run beyond the 140% it's already gained from its lows.

Speculation Friday

For "Speculation Friday," Cramer did an about face on his ban of all solar stocks other than First Solar ( FSLR), and recommended Yingli Green Energy ( YGE) and Suntech Power ( STP) as two companies investors may want to consider.

Cramer said he changed his mind on these two companies based on the new Chinese solar initiative that promised 50% subsidies for solar installations in urban areas. The plan, which hopes to subsidize over 500 megawatts of solar power, should be good news for Yingli and Suntech, said Cramer.

Suntech will likely participate in all of the high-profile solar installations, said Cramer, and the company has many of its supply and distribution problems now behind it. Yingli is a low-cost solar provider like First Solar that said things were getting brighter for solar power despite reporting another bad quarter.

Cramer said there still are many risk factors for the sector, including too much inventory, falling oil prices and continued earnings disappointments. However, he said if the Chinese plan turns out to be as big as proposed, both Yingli and Suntech should see sunny results.

Mad Mail

In this segment, Cramer followed up on RINO International ( RINO), a stock mentioned in Thursday's Lightning Round. He said the stock needs to cool before he'd be a buyer.

Cramer told another viewer that the run in Skyworks Solutions ( SWKS) is for real, and he's stay bullish after taking some profits. He told a third viewer that American Electric ( AEP) is not a green stock, but both Dominion ( D) and Excelon ( EXC) would be.

Finally, Cramer told a viewer than Google ( GOOG) will sink or swim based on the advertising market, and not based on any actions taken by rivals Microsoft ( MSFT) or Yahoo! ( YHOO).

Lightning Round

Cramer was bullish on OmniVision Technologies ( OVTI) and Valmont Industries ( VMI).

Cramer was bearish on Intuitive Surgical ( ISRG).

Check out the latest edition of "Cramer's Take on Top-Searched Stocks" on Stockpickr.

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For more of Cramer's insights during the Lightning Round, click here .
At the time of publication, Cramer was not long on any stock.

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