Jim Cramer can finally see a clear formula of what is working and what is not right now. The secret key to finding it? Have a short attention span, because what is hot one day is not the next. The stock rotation Cramer sees happening has produced one of the scariest declines he has ever seen.

"It is fascinating to watch this formula play out because it is so ephemeral. In other words, it makes sense, but only for a few days before the market loses interest and moves on to something else," the "Mad Money" host said.

For weeks, this market absolutely hated industrials. It hated them so much that the stocks actually became oversold. Then out of nowhere, the big portfolio managers who determine stock prices suddenly had a bullish view on them in a blink of an eye.

What the heck happened?

First, General Electric was endorsed by Nelson Peltz, the famous activist investor, which sent it roaring. Then GE reported a stellar quarter, and Wall Street gobbled up the stock. That was a signal to Cramer that there is now an appetite for industrials.

On Wednesday, excellent numbers were reported from both Boeing and General Motors, which also reinforced Cramer's view that this group has gotten too cheap to ignore.

In Cramer's perspective, what happened was that portfolio managers began to underweight industrials dramatically because they were worried about worldwide economic weakness. So, now that the group was underweighted, and rumors of China starting to improve surfaced — portfolio managers frantically started to rush back in to the group.

Yet, at the same time, investors now have an enormous amount of hate for drug and health care stocks.

"I think the money that is coming into the industrials is cascading out of health care," Cramer said. (Tweet this)

At the same time, Cramer has seen money flooding out of the retail, oil and gas stocks. That is strange because, typically, what is bad for oil and gas should be good for retail. But that doesn't seem to be the case right now. The same goes for the high- growth tech stocks, as Tesla and Netflix have both hit a wall recently.

Read more from Mad Money with Jim Cramer

Cramer Remix: A taste of Chipotle's mild earnings
Cramer: IBM's stock could fall a LOT further
Cramer: What fueled the huge move to value stocks

Cramer's breath was taken away with the Valeant sell-off on Wednesday, too, after a short-selling research firm compared it to Enron. At one point the stock shed about 60 points from its $150 price, before it rebounded to close at an astounding price of $118.

"It was one of the scariest declines I have seen in my 35 years of investing," Cramer said. (Tweet this)

This rotation has suddenly taken the groups that were most loathed and made them most loved. The sleepy health care stocks are giving investors many sleepless nights, and the hard-to-handle industrials are acting fabulous.

So, watch out, because Cramer considers this market a bear on the hunt. Any group can get mauled at any time; it just depends on the day.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

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