Jim Cramer's 'Mad Money' Recap: Fear and Loathing on Wall Street

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NEW YORK (TheStreet) -- What are the two best words to describe this market? Fear and loathing, Jim Cramer told his Mad Money viewers Tuesday after another confusing day on Wall Street. Cramer said fear and loathing is what professional money managers are feeling as they try and make sense of the action.

What do money managers fear? Most of it resides overseas, Cramer explained. He said Japan's failed strategy to reignite its economy is worrisome because that country seems to be falling deeper into disarray. Then, of course, there's China, where even with lower and lower estimates the country struggles to provide any surprising economic data.

The markets are also worried about Ukraine, whether it be sanctions or outright conflict -- just about every outcome seems worrisome to traders. There's also the usual trading of U.S. bonds, which continue to see prices rise and interest rates fall, at the exact point in the economic cycle they should be doing the opposite.

Cramer reminded viewers Wall Street always fears the unknown, and when bonds do the opposite of what they're supposed to do something is very wrong. He said traders also don't like the wild intraday swings we've been seeing, with strong opens and very weak closes.

Add to that surprising rallies in select high growth stocks and inexplicable selloffs in others and, well, you can see why money managers are heading for the hills and loathing this market.

If You're So Good...

If all of these initial public offerings are really so good, why weren't they acquired? That was the question Cramer posited to viewers as he continued his rant against the flood of initial public offerings that have hit the market so far this year.

Cramer said if the myriad of cloud, biotech and human resource IPOs were really as good as the analysts think they are, the established players would've swooped in and bought them before they went public. The fact these deals came to market at all means the bankers feel the public will value them more than the potential acquirers, and that's very worrisome.

It's not as if the established players don't have the capital, Cramer noted. Facebook (FB) clearly had the capital for What'sApp and Google (GOOG) just bought an aerial drone company, of all things. So why aren't they snapping up GrubHub (GRUB) or Zoe's Kitchen (ZOES)?

Cramer said once these companies go public, their valuations simply get too high. Zillow (Z) could buy Trulia (TRLA), for example, and own the online real estate market in perpetuity, but now that Trulia is public that deal would be very costly.

That makes buying up companies pre-IPO the thing to do, Cramer concluded, which is why the fact it's not happening should raise eyebrows.

Off the Tape

In his "Off The Tape" segment, Cramer sat down with Daymond John, founder and CEO of the privately held FUBU, as well as co-host of Shark Tank and the self-proclaimed "king of branding." Back in April 2010, John created his "Lifestyle Brand Index," a collection of stocks that is now up 92%, beating the S&P 500 and its growth of 54%.

John said that Samsung (SSNLF) still has the smart phone buzz and Apple's (AAPL) iPhone is still lagging behind. He was still bullish on both Under Armour (UA) and Facebook, two stocks in his 2010 index.

John added two new names to his index, Walgreens (WAG) and Tesla Motors (TSLA), and also touted AOL (AOL) and Netflix (NFLX) as the content delivery systems of the future.

Finally, John and Cramer were both bullish on Whole Foods Markets (WFM) and Starbucks (SBUX).

Cramer's Playbook

For the next installment of "Cramer's Playbook," Cramer once again helps investors build a solid financial footing, this time by answering the question of whether or not to use stop-loss orders to protect yourself from big market selloffs.

Cramer said he's not a fan of stop-loss orders -- which automatically sell a stock if certain conditions are met -- for regular investors. He said home gamers should be longer-term investors and not traders worried about the day-to-day action in the markets.

One of the hardest lessons for beginning investors to master is not worrying about selloffs and actually embracing them. Selloffs are nothing more than stocks being put on sale, he said, and are a normal part of a healthy market. Investors should love market declines and use them as buying opportunities.

Investors who use stop-loss orders may not be able to get back into their positions and miss the snap-back rallies that so often occur. That's why Cramer advocates being diversified and always keeping some cash on hand so investors can treat selloffs for what they are -- great times to buy more.

Lightning Round

In the Lightning Round, Cramer was bullish on Constellation Brands (STZ), Teva Pharmaceutical (TEVA), Brown-Forman (BF.B), DexCom (DXCM), Delta Air Lines (DAL) and Colony Financial (CLNY).

Cramer was bearish on LinkedIn (LNKD) and Arena Pharmaceuticals (ARNA).

Off The Charts

In the "Off The Charts" segment, Cramer went head to head with colleague Bob Lang over the chart of Merck (MRK), a stock that's up 10% so far in 2014 and currently pays a 3.1% dividend yield.

Looking at Merck's daily chart, Lang noted the stock has largely been immune to the market's recent volatility, trading sideways for the past six weeks, displaying a bullish basing pattern just above its 50-day moving average and well above its 200-day average. The relative strength indicator has also been ramping up, another bullish sign.

Lang noted the weekly chart was also bullish, with the stock in essentially a 16-month uptrend with lots of buying from big institutions. Merck has a floor at $55 a share and is showing a bullish flag pattern.

Cramer said he's a fan of Merck's fundamentals as well because the company has many great franchises and a terrific buyback and dividend. For investors who are getting seasick from the ups and downs of the markets overall, a stock like Merck may be just the stock to settle you, Cramer concluded.

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 positions in AAPL, FB, GOOG and WFM.

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