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NEW YORK ( TheStreet) -- This market marches to the tune of expectations, Jim Cramer said on Mad Money Tuesday. It's expectations, not the earnings, that determine the direction of a company's stock price.
That's how a stock like Whirlpool (WHR - Get Report) could miss estimates by 9 cents a share and still see its shares up over 6% by the day's close, Cramer explained, or how Buffalo Wild Wings (BWLD) shares could rocket 13% on its earnings. In the case of Wild Wings, Cramer said the expectations were that higher wing prices would cripple earnings. Unfortunately for the bears, nothing could have further from the truth.
Other winners in the expectations game included Cummins (CMI - Get Report) , Parker-Hannifin (PH - Get Report) and Spirit Airlines (SAVE - Get Report) , all companies where investors expected a little but received a lot.
On the flip side, however, were stocks like Kohl's (KSS - Get Report) , where investors were hoping for a turnaround that never came, said Cramer. Kohl's shares fell 6% on the disappointment, as did Masco (MAS - Get Report) and Facebook (FB - Get Report) , a stock Cramer owns for his charitable trust, Action Alerts PLUS, which plummeted 11% on not-so-hot guidance.
That's why expectations matter, and why stocks that run up going into an earnings release rarely are able to hold onto those early gains, Cramer concluded.
Off the Charts
In the "Off The Charts" segment, Cramer went head to head with colleague Dan Fitzpatrick over the direction of the broader markets.
Starting off with a daily chart of the S&P 500, Fitzpatrick noted the index's multi-year uptrend broke down in early October, climaxing on Oct. 15 where it saw a bullish reversal midday and never looked back. Since then the S&P has rallied nearly 9% to a level that Fitzpatrick now thinks is overbought in the short term.
While the S&P broke below its key 200-day moving average during that time, a bearish sign, it only did so for seven days before recovering, keeping Fitzpatrick bullish over the longer term.
A weekly chart of the Dow Jones Industrial Average shows that index bottomed on the same day as the S&P but has been slower to recover. Fitzpatrick felt the Dow will likely consolidate below its resistance level of 17,350.
Finally, Fitzpatrick looked at the Nasdaq, noting a double top at 4,600, a level he said will now be that index's resistance level. With volumes declining as the Nasdaq has been recovering, Fitzpatrick also felt this index will likely trade sideways over the short term.
Cramer said he found Fitzpatrick's uneventful analysis to be reassuring, saying he'd still be a buyer on any market pullbacks to be ready for when the bull market resumes.
Yahoo!'s Mayer Beats Twitter's Costolo
Cramer said it's time for the venom directed towards Yahoo! (YHOO) CEO Marissa Mayer to end and for the pundits to set their sights on Dick Costolo, CEO of Twitter (TWTR - Get Report) , an Action Alerts PLUS holding.
Cramer, who last defended Mayer on "Mad Money" last week, noted that not only has Mayer tripled the price of Yahoo's stock since taking the helm in 2012, she also mended fences with Alibaba (BABA - Get Report) , allowing Yahoo! to retain 122 million shares rather than being forced to sell them all.
Meanwhile, Twitter is telling a different story. Growth is slowing, Cramer said, and Costolo's plans to remedy the situation appear cloudy at best. At a time when Twitter could easily become the world's realtime news service, it isn't.
Cramer said the free pass for Costolo needs to end before the sun starts setting on an otherwise great company. As for Mayer, he concluded, what more could you ask for?
Executive Decision: Ben Baldanza
For his "Executive Decision" segment, Cramer spoke with Ben Baldanza, president and CEO of Spirit Airlines (SAVE - Get Report) , which just posted a 3-cents-a-share earnings beat on a 13% rise in revenue, news that send shares up 7% on the day. Shares of Spirit are up 22% since Cramer last checked in six months ago.
Baldanza said Spirit is all about offering travelers value and making the business of flying understandable to people. He said that if the price is right, more people are willing to travel and Spirit is the airline for price-conscious travelers.
Baldanza continued that Spirit has seen no impact from the recent Ebola scare and is also benefiting from lower fuel prices in the short term.
Baldanza took an interesting view on fuel prices over the long term, however, noting the higher prices of years past actually helped the airline industry a lot by forcing consolidation and putting everyone on a more solid footing.
Cramer said Spirit continues to deliver for not only its customers but its shareholders.
In the Lightning Round, Cramer was bullish on Goldman Sachs (GS - Get Report) , Agios Pharmaceuticals (AGIO - Get Report) , EOG Resources (EOG - Get Report) , Fortinet (FTNT - Get Report) , CyberArk Software (CYBR - Get Report) , Halliburton (HAL - Get Report) and Isis Pharmaceuticals (ISIS) .
Executive Decision: Martin Richenhagen
Richenhagen said Agco still has a great story to tell with a growing global population with changing dietary tastes. Additinoally, he said Agco continues to do the right things, including its recently announced stock repurchase program.
When asked about inventory levels, Richenhagen said levels are reasonable for the current environment and Agco continues to manage inventories very well. Richenhagen did admit, however, that sanctions against Russia are challenging the business.
Cramer said Agco is one situation where what comes down must eventually go back up.
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