Jim Cramer's 'Mad Money' Recap: A Glimmer of Hope

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NEW YORK ( TheStreet) -- The debate has changed in Washington, Jim Cramer told his "Mad Money" TV show viewers Thursday, and it looks like the markets have changed right along with it.

Cramer said that over the past 48 hours the debate in Washington has shifted. The focus is now where it rightfully belongs, on everyday Americans, including those in the military and on Social Security who won't be getting their benefit come Oct. 17. No one wins elections by stopping Social Security, which is why a compromise now seems suddenly possible and why the markets cheered.

But the newfound euphoria may be short-lived, said Cramer. Earnings season is upon us and just about every company will be providing investors with a cautious outlook at best. Yes, the fundamentals are once again going to take center stage, said Cramer, but it may be difficult to find many positives to keep stocks on the upswing.

Cramer said he's worried about technology as telco and discretionary spending have begun to slow. Likewise with the banks, where business ahead of Washington's two-week sideshow had already begun to show signs of weakness. Then there's retail, another major component of our economy, which also struggled to gain a fitting last quarter. Will anyone has positive things to say about this year's back-to-school season? Probably not.

It's the outlooks that determine whether you make money in the stock market, Cramer concluded, and going into this quarter the outlooks are sure to be tempered at best.

Sell Block

In the "Sell Block" segment, Cramer sounded the alarm, saying it's time to trim positions in many of the speculative biotech names that have been up huge so far this year as they play everyone's favorite game, FDA roulette.

Cramer said the recent examples of Ariad Pharmaceuticals ( ARIA), which lost 66% of its value in a single day, and Achillian Pharmaceuticals ( ACHN), which lost half of its value, should prove as sober reminders that not everything goes according to plan in biotech.

Cramer said that stocks such as Insys Therapeutics ( INSY), up 453% for the year, along with Acadia Pharmaceuticals ( ACAD), up 295%, and NPS Pharmaceuticals ( NPSP) and Isis Pharmaceuticals ( ISIS) only reflect the upside and none of the downside at these prices.

Make no mistake, Cramer still loves all of these companies and their contributions to curing diseases, but Ariad and Achillian should serve as a wake-up call that companies that don't even have products on the market yet can be taken out by the Food and Drug Administration at a moment's notice.

Getting Through the Mumbo Jumbo

In the next installment of his "Survival Guide" of defensive stocks to combat the Washington "mumbo jumbo," Cramer turned his sights on the oil and aerospace stocks, two areas that can transcend politics as they're both in secular growth mode.

Cramer said when it comes to aerospace, don't overthink it, go with Boeing ( BA). He said every carrier needs new, fuel-efficient planes and Boeing has a 20-year plan to deliver them thanks to its 10,000-plane backlog.

In the oil patch, Cramer said it's not the majors that are performing, it's the independent names in America's shale fields that are delivering the goods. That's why he's still a fan of names including Gulfport Energy ( GPOR) and Cabot Oil & Gas ( COG), along with EOG Resources ( EOG) and Pioneer Drilling ( PXD).

Cramer said that any of these stocks can be bought on weakness as Congress works out the details of its latest promise of compromise.

Lightning Round

In the Lightning Round, Cramer was bullish on Perrigo ( PRGO), General Dynamics ( GD), 3M ( MMM) and Noble Energy ( NBL).

Cramer was bearish on Green Mountain Coffee Roasters ( GMCR), InvenSense ( INVN), Lannett Company ( LCI), Canadian Natural Resources ( CNQ) and Emerald Oil ( EOX).

Executive Decision: David Jaffe

In the "Executive Decision" segment, Cramer spoke with David Jaffe, president and CEO of Ascena Retail Group ( ASNA), purveyors of the Dress Barn, Justice and Maurice's clothing stores.

When asked about the retail market overall, Jaffe noted that Ascena is positioned a little differently than most apparel retailers. He said the value end of apparel is doing well, as is the high end, but in the middle customers are feeling squeezed and are more willing to trade down -- which is where Ascena's brands are positioned.

Apparel is also being challenged by other categories, Jaffe said. Big items like autos and things for the home as well as electronics seem to be taking precedence over apparel. What the market needs more is a return of consumer confidence, something that the Washington shutdown is only making much worse, he said.

Turning to Ascena's brands, Jaffe said its turnaround plans for brands such as Lane Bryant are starting to take effect; meanwhile, e-commerce is also paying off. Ascena can allow customers to do things that online-only retailers can't, such as buying online and shipping to a store or ordering from a store and shipping to a customer's home. These all add value that other stores can't deliver.

Cramer said he is a believer in the Ascena story, calling it the right play for the current retail environment.

No Huddle Offense

In his "No Huddle Offense" segment, Cramer said when it comes to the high-multiple Nasdaq stocks, investors need to wait three days and then buy, buy, buy.

That's what happened with stocks such as Gilead Pharmaceuticals ( GILD), Yelp ( YELP) and LinkedIn ( LNKD) as money managers stepped aside and the shorts swooped in, only to take things too far.

Cramer said this three-day pattern repeats itself time after time and the completion of the patten ended today -- buyers once again caught the shorts off guard, sending all of these names up sharply.

The next time investors see big selloffs like what we saw on Monday, Cramer said they need to sit back and start counting.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

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-- Written by Scott Rutt in Washington, D.C.

To email Scott about this article, click here: Scott Rutt

Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.

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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