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Case in point: Caterpillar (CAT) , which slashed its earnings guidance and sent shares lower by $2 a share in premarket trading, only to see them rally and rally hard, up 2%, by the close.
How can this happen? Cramer explained that commodity prices have been rallying as of late and now that he Federal Reserve is no longer raising interest rates, that means a weaker U.S. dollar, which is great news for Cat, a company that sells a great deal overseas.
But there's more to the Caterpillar story. First, there are the many hedge funds betting against the stock. If a big estimate cut doesn't send shares lower, what will? That was what the shorts were asking as they scrambled to cover their positions. Then there are the many mutual funds that have been underweight the industrials. What a great time to buy after all of the bad news is finally out in the open.
Add all of these factors together and it's easy to see how a rally is born. That rally extended well beyond just Caterpillar. Eaton (ETN) rose 3.8%, Illinois Tool Works (ITW) gained 2.4% and Fedex (FDX) roared higher by 11.8% after its strong earnings.
All of the money rotation into the industrials is coming out of the banks, which need higher interest rates, and pharmaceuticals, which have been plagued by the woes of Valeant Pharmaceuticals (VRX) . How long will the move last? Cramer said to keep an eye on the dollar to find out.
Executive Decision: Brad Smith
For his "Executive Decision" segment, Cramer sat down with Brad Smith, chairman and CEO of Intuit (INTU) , the small business accounting software company that also offers TurboTax tax preparation services for individuals.
Smith said that Intuit's mission is to improve the financial lives of its customers. It aims to take the accounting out of small business accounting and to empower individuals to file their own taxes.
This year, Intuit roll out its "Absolute Zero" program, which allows individuals filing with an 1040EZ form to pay absolutely nothing. The company also recently completed a contest that gave one small business an ad during this year's Super Bowl.
When asked about the Affordable Care Act, Smith called it a catalyst for TurboTax because the company has made it extremely simple to either claim a credit or pay the penalty.
Cramer called Intuit, a service he uses for his own small businesses, "a great company."