Cramer's 'Mad Money' Recap: The Power of Positive Thinking

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NEW YORK ( TheStreet) -- The bears may control the game but they don't control the market, Jim Cramer told "Mad Money" viewers Tuesday.

Cramer said the stocks that are getting hit the hardest, Caterpillar ( CAT), FedEx ( FDX) and Norfolk Southern ( NSC), are already behind the market since they are among the companies that blame a slowing global economy for lower earnings and expectations.

Cramer said the power of positive thinking and the belief these companies will do better next year are behind the cushion keeping them from falling further. Money managers and hedge fund managers who are 90% behind the averages now need to make up that difference.

Lately, the reaction to bad news has been benign, Cramer said. The markets should have fallen a lot further than they did -- but the end-of-quarter phenomenon and managers trying not to lose their shirts helped keep stocks from dropping as far as expected.

Executive Decision

In the "Executive Decision" segment, Cramer spoke with Martin Mucci, chief executive of Paychex ( PAYX) about analysts' concerns.

The company's first quarter was down from a year earlier, and Mucci said that was due to timing of payroll volume and frequency. Checks per payroll were up 2%, Mucci said, his clients are hiring and he sees positive signs in the "macro environment."

Cramer said the bears are concerned the payroll market is mature and saturated and that's why Paychex is expanding to insurance, investments and other areas.

Mucci said that once his company has a client they can be sold other products. He said that half of the company's sales come from new businesses. Even in a bad year, 750,000 new businesses are started.

Client retention is getting better, Mucci said. Fewer clients are going out of business and fewer are jumping ship. The client base is also improving. "We're also seeing clients picking up 401(k) and health insurance," he said.

Cramer said the analysts who downgraded the company "keep moving the goal posts" and raising the stakes.

Off the Charts

In his "Off the Charts" segment, Cramer spoke with Street.com colleague Scott Redler, the chief strategic officer of T3 Live, about Apple ( AAPL), a stock that's part of Cramer's charitable trust, Action Alerts PLUS.

Cramer sees Apple as an example of how important it is to stick with stocks that have proved upward momentum.

Redler said Apple is due for a dip but believes those dips could be buyable. The day's drop to a 21-day moving average is a key test of support.

If Apple holds on to its recent gains, Redler said, it may follow in Google's ( GOOG) footsteps. If not, Apple may move to its 50-day moving average around $644.

He expects Apple to be rangebound, and trading sideways until it reports earnings Oct. 15. Redler doesn't think Apple has hit its highs for the year, Cramer said. The stock may pull back, so Cramer warned of buying on the dip.

Cramer said he believes in Apple as an investor and he is not trading it. Redler said that while the stock is due for a pullback, there's still reason to believe it can rebound. So wait before you buy on the dip.

Lightning Round

Here's what Cramer had to say about callers' stocks during the "Lightning Round":

Key Energy Services ( KEG): They are call options on oil. If you think oil's going to go down, they're going down. Cramer doesn't think it is. He also likes Heckmann ( HEK).

Monsanto ( MON): This stock should have been down three or four points after this great run, he said. This is one to buy on weakness, and Cramer doesn't know if you're going to see any.

Asked about Fifth Street Finance ( FSC), Cramer directed the caller to KeyCorp ( KEY).

Although Cramer said he'll never sneer at a 4% yield, he said that while Intel ( INTC) can do the smartphone, what has to happen is Apple has to say, "We're done with Samsung, we're switching to Intel." Until they do that, he said, "you are flogging a dead horse" buying Intel.

Asked about Corrections Corp. ( CXW), he said that "is a contract company and I have not been good at calling that group. I have to do more work and tell you the contracts are good."

Up in the Cloud

In the second "Executive Decision" segment, Cramer spoke with Red Hat's ( RHT) CEO Jim Whitehurst.

The CEO said the company's business "is going fantastically" and the core software business at the cloud computing company is up 20%.

Cramer said Red Hat is buying companies and investing in them and you have to do that in order to maintain both your growth rate and the price-earnings multiple. He doesn't understand what the analysts want Red Hat to do.

Whitehurst said the company missed its earnings forecast by 1 cent due to costs associated with closing the deal on recent buys. That represented 100% of the miss. "We continue to have solid operating margins, and cash flow from operations grew 35% year over year," he said.

Whitehurst said last year's Gluster acquisition is expected to add to revenue and billings next year.

Red Hat is taking on large strategic companies, the CEO said.

Cramer said what Red Hat is doing is building the business "and that's what we want." Red Hat can hold up under close scrutiny, Cramer said.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer took another look at Apple vs. Google and refuted those who listened to him Monday and thinks he likes Google better.

He said that good trading, like investing, is a matter of where you make your entry point. You simply don't want that first buy to be too high or feel like you're going out on a big limb, Cramer told viewers.

He said people missed the point when he said Monday that Google might have been a better buy than Apple. It's not a matter of liking Google better or whether he will sell Apple, he explained, it's just a matter of which offers a more attractive entry point at this moment.

While Apple is still riding the wave of its iPhone 5 release, Google investors seem to be getting their groove back, he said. He likes both stocks and considers them cheap.

But "This isn't politics," he said, "this is investing. I'm not trying to get elected. I'm not even trying to make friends. My goal is and always has been to try to get you to make as much money as possible."

So he advises investors to keep your eye on Apple as it pulls back. In the meantime, Google right now is signaling "buy."

--Written by Anthony Buccino in New York for The Street.

At the time of publication, Cramer's Action Alerts PLUS had a position in AAPL and KEY.

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

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