Jim Cramer's 'Mad Money' Recap: A Week of Market Madness

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.


NEW YORK (TheStreet) -- There are four weeks a year when the markets become a mad house, Jim Cramer said Tuesday on Mad Money. This week, the height of earnings season, is one of those weeks.

Cramer once again urged investors to steer clear of stocks during earnings week because they're up against terrible odds and the market's reactions to news can be totally out of sync with reality.

Case in point: the battleground that is Herbalife (HLF). Cramer said the tennis match between activist investor Bill Ackman and company management has become totally unpredictable, with shares soaring 25% on "news" Ackman had thought would sink the company. Cramer said investors need to avoid battlegrounds like Herbalife at all costs.

Then there's Apple (AAPL), a stock Cramer owns for his charitable trust, Action Alerts PLUS. Many investors are already "disappointed" with iPhone sales, but does that truly reflect the company's prospects with new, possible bigger, phones on the horizon, plus a new deal with IBM (IBM) and potential wearable devices?

And what do we make of General Electric (GE), another Action Alerts PLUS stock? Company management proclaimed everything was great but digging into the details saw revenue misses in several key areas.

So while the markets are running around guessing, second-guessing and reformulating their thoughts on earnings news, Cramer said home gamers are better off sitting on the sidelines and waiting for calmer seas next week.

Good Taste vs. Good for You

A battle is raging between what tastes good versus what's good for you. Nowhere can the rebellion be more clearly seen than between Chipotle Mexican Grill (CMG) and its former parent, McDonald's (MCD).

Cramer said the stark contrast in these two companies' earnings couldn't be more clear, with McDonald's suffering from not enough customers while Chipotle struggles to get its too many customers through its lines faster.

McDonald's earnings were abysmal, Cramer said. Consumers are rebelling against cheap, non-organic food, even though that food has been engineered to be loved by all. This is not only a trend in the U.S. but is now spreading worldwide, he continued.

Meanwhile, Chipotle, whose shares popped 11% on its huge 17% increase in same-store sales, appears to be resonating even more with its core audience of younger people. Even with food that's more expensive than McDonald's, Chipotle can barely keep up with demand.

Cramer said this rebellion can also be seen in the earnings of Coca-Cola (KO) as consumers are increasingly eschewing sugary drinks for water and healthier alternatives.

This move is still in its infancy, Cramer concluded, which is why he expects Chipotle to outperform McDonald's for many years to come.

Executive Decision: Patrick Doyle

For his "Executive Decision" segment, Cramer spoke with Patrick Doyle, president and CEO of Domino's Pizza (DPZ), which saw its shares soar 3.7% in today's session as the company posted a 2-cents-a-share earnings beat on a 5.4% increase in U.S. same-store sales and a 7.7% increase in its international same-store sales. Shares of Domino's are up 715% since Cramer first recommended the company four and a half years ago.

Doyle said Domino's is seeing a nice uptick in global momentum and has many things now pulling in its favor. He said the company's new iPad app has been very well received and Domino's is seeing a slow decline in the prices for corn, wheat and other commodities.

When asked whether Pizza Hut, owned by Yum! Brands (YUM), is falling apart, Doyle said that the trend has been that the big guys are taking market share from the little guys, but he thinks the Yum! has the ability to still turn around Pizza Hut and make it more competitive.

Turning to the company's social media initiatives, Doyle said that Domino's advertises where the eyeballs are, and that includes Facebook and Twitter.  He said unlike with other advertising, his company knows exactly what the return on investment is with these channels and it's working well.

Cramer said that after lagging earlier this year, Domino's shares are "rested and ready" to resume their march higher.

Off the Charts

In the "Off The Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the charts of the three biggest winners so far this quarter, according to Fitzpatrick, Kinder Morgan Energy Partners (KMP), Morgan Stanley (MS) and Honeywell (HON).

After peaking in April 2013, Kinder Morgan spent a long time trending lower, finally bottoming this past March before beginning to rebound. Since then, however, it has seen a higher low in May, crossed above its 200-day moving average and then most recently, saw its 50-day moving average cross over the 200-day. All these are bullish signs as Kinder has gone from hated to loved once again.

Honeywell has been trading sideways for the past five months, Fitzpatrick noted, building a "high base" that is now the floor for its next uptrend. He noted that with the volume remaining low, it's clear the big holders of the stock are sticking with Honeywell. If shares can cross $100, the sky's the limit.

Then there's Morgan Stanley, with a chart very similar to that of Honeywell. Shares have been consolidating, but now appear ready for another leg higher, with its 200-day moving average being the floor of support.

Cramer said he agreed with Fitzpatrick and his analysis. All three of these stocks are looking very bullish.

Lightning Round

In the Lightning Round, Cramer was bullish on Huntington Bancshares (HBAN), Entertainment Properties Trust (EPR), Activision Blizzard (ATVI), Take-Two Interactive (TTWO), Six Flags (SIX), Cedar Fair (FUN), Government Properties Income Trust (GOV) and Petrobras (PBR).

Cramer was bearish on W. P. Carey (WPC).

Executive Decision: Michael Roth

In his second "Executive Decision" segment, Cramer sat down with Michael Roth, chairman and CEO of Interpublic Group (IPG), the world's fourth-largest advertising agency, to discuss the state of the advertising industry.

Roth confirmed that this quarter digital advertising surpassed network television spending for the first time. He said digital advertising makes it easier to measure a company's return on investment, but that doesn't mean that TV is not still a powerful force to be reckoned with.

Diving deeper into digital advertising, Roth said digital is now embedded in everything the company does, with a large part of their advertising spend heading to Facebook (FB). Where Interpublic shines, he noted, is in delivering fully integrated, global offerings to clients.

When asked about the failed merger between the industry's largest players, Roth said that all eyes have been on Interpublic as a possible takeover candidate, but its focus remains clear -- build shareholder value. Interpublic doesn't need a merger, he said, but it will certainly consider any attractive offer that's presented.

Cramer continues his recommendation of Interpublic Group.

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

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

-- 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 a position in AAPL, FB and GE.

More from Jim Cramer

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Finding Stocks Right for You: Cramer's 'Mad Money' Recap (Friday 8/25/18)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Video: You Could Live in a Ritz-Carlton or St. Regis Home

Video: You Could Live in a Ritz-Carlton or St. Regis Home