Cramer believes dynamics in the market are shifting. And the impact could be substantial.
Largely the changes involve the way in which the two dominant types of investors view the market. Here's the breakdown:
Hiders: "This is the group of investors who are looking for weaker economic data to keep the Federal Reserve bond buying program intact," Cramer said. "These investors have put money to work in the stock market because the Fed's QE program has made the bond market an impossibility.
Seekers: "These are investors who buy stocks on the belief that as the economy improves, the profits generated by these companies will improve, too," Cramer said. "They believe that well-run companies that trade at inexpensive valuations are the best places to put money to work."
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"For the longest time, these two groups co-existed," Cramer said. Hiders, or investors focused on the Fed, were satisfied that the economy was too weak for QE to wind down. Interest rates were so low that stocks with 3% yields were attractive.
Meanwhile Seekers, or earnings investors, could bet that on the economy getting better down the line. "They enjoyed prospect of improvement and rewarded stocks that participated in the recovery."
However, over the past 10 days everything changed.
Yields on 10-year Treasurys spiked to 2.2%—about a 13-month high. The yield also represents both a 50-basis-point gain over the past 30 days and a 54% increase from the July 2012 bottom of 1.38%.
"Suddenly, Hiders, those in dividend yielding stocks, felt exposed," Cramer said. "After all, if these stocks fell 10 percent, that would surely wipe out the 2.75% yield that they were in for. They were in for safety, they stayed in until it is dangerous."
Also, Seekers, or earnings investors, faced headwinds. As Treasury's spiked, so did mortgage rates. At 3.81%, according to a recent Freddie Mac mortgage survey, mortgage rates are nearly half of a percentage point above their low point for 2013.
In turn, Seekers questioned whether the recovery in housing could stall. And should that happen, could the slowdown ripple across a wide range of stocks?
As a result, the Street no longer has conviction from either Hiders or Seekers.
"So everyone's selling," Cramer said.
"They are selling the stocks that do well if there's very little growth. They are selling the stocks that do well if we're going to get more growth. They are simply saying, 'ring the register and buy stocks lower and later.' "
And Cramer expects the sentiment to remain pervasive until a catalyst emerges that either confirms or denies the outlook. "Both camps are in panic mode and can't be appeased. There's just not enough data to satisfy either," Cramer said.
Therefore, until the impact of higher rates becomes clear, he sees the market remaining in limbo. "Sometimes you can't please everybody. Right now you can't please anybody."
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