Cramer: Reaction to Salesforce earnings telling

Salesforce.com CEO: Great quarter
Salesforce.com CEO: Great quarter   

(Click for video linked to a searchable transcript of this Mad Money segment)

If you've been wondering how much further momentum stocks may fall, Jim Cramer says the market is about to give you an important update.

It won't come formally with a flourish of trumpets nor will it arrive on embossed letterhead.

Instead Cramer says it will come subtly, in the way the market reacts to Salesforce.com earnings, both in the aftermarket on Tuesday and then in the regular session on Wednesday.

That's because, the last time Salesforce.com reported earnings, in February, Cramer says the resulting price action served as a leading indicator for the broader decline in momentum stocks.

Salesforce
David Paul Morris | Bloomberg | Getty Images

"Back then, Salesforce delivered a terrific quarter, the stock rallied in after-hours trading; but then the next day it opened down slightly, and by the end of that session it had fallen nearly four points, from $66 down to $62 and change."

Since then, Salesforce.com, as well as many other software-as-a-service stocks, have been on a downward trajectory.

But, just as they followed Salesforce.com lower, Cramer says, "If Salesforce.com can reverse direction and start going up after it reports, I believe many other stocks could follow it higher now."

Looking at the latest earnings, Cramer thinks there may be reason for optimism.

Salesforce reported a better-than-expected 37 percent rise in quarterly revenue, helped by higher demand for its sales and marketing software.

Revenue jumped to $1.23 billion in the first quarter ended April 30 from $892.6 million a year earlier. Analysts on an average had expected revenue of $1.21 billion, according to Thomson Reuters I/B/E/S.

The company's net loss widened to $96.9 million, or 16 cents per share, from $67.7 million, or 12 cents per share. Excluding items, it earned 11 cents per share.

--------------------------------------------------------
Read more from Mad Money with Jim Cramer
Stealth signal green lights two buys
Cramer: Potential upside enormous
Why isn't Google bidding for DirectTV?
--------------------------------------------------------

"Salesforce delivered on every single line," explained Cramer. "For me, the metric that matters is operating cash flow. I was thinking that Salesforce could do between $325 and $349 million. They came in at $473 million."

Salesforce CEO Marc Benioff lauded the company's results. "This was a great quarter and you can see it in the operating cash flow," he said.

"If my metric matters then I'd think the stock is going higher," Cramer said. "But this is a very difficult market. Make no mistake, if the market keeps thirsting for companies that have reasonable valuations on earnings then there's nothing here that will rekindle interest in the cohort."

Therefore, Cramer intends to watch the price action very carefully. How Salesforce trades on Wednesday could speak volumes.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Cramer's New Book