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These 4 ‘no good’ leaders flabbergast Cramer

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

Jim Cramer shoots straight from the hip. And he's got something to say about four leaders that he just doesn't like.

Oh no, we're not getting political. Nope, we're talking markets, like always.

Cramer always follows leadership in the stock market identifying the best performing equities that either led an advance or rallied when the market declined broadly.

On Tuesday, "we got remarkable leadership from social media stocks, notably Twitter, Facebook, Yelp and LinkedIn, all of which charged right over the top," Cramer said, while the S&P closed lower.

At first glance, you might find the leadership encouraging. After all, these companies are involved in new technology. By leveraging the promise of the Internet, any one of these companies could play a central role in our nation's future.

And all of that is true.

But there's something else about these stocks that Cramer thinks matters more, right now. And it's not a good thing – at least it's not good if you're a bull.

Adam Jeffery | CNBC

"They are all heavily shorted because they're widely thought to be overvalued," Cramer explained.

When stocks that are heavily shorted are among the best performers in the market, Cramer views the advance cautiously. Instead of the rally being a vote of confidence, it's more likely a sign that a massive short squeeze is underway. That is, investors who shorted these stocks are now covering their bets.

And a short squeeze isn't a very good reason to feel good about a rally.

"Old pros like me prefer to see stocks rally on fundamentals," Cramer explained. That's a truly bullish phenomenon. A short squeeze? Not so much.

To make circumstances all the more concerning, other stocks that rallied Tuesday are also worrisome leaders. "Ulta Salon and Green Mountain Coffee were also big winners," Cramer added. (Ulta is a company Cramer profiled last week as one that's potentially broken.)

What should you make of it?

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If these 'worrisome winners' lead over a period of only one or two days then Cramer wouldn't think much of it. "We have periodic bouts where the victims of extreme short-selling rally," Cramer noted.

However, if the phenomenon endures, Cramer thinks it will warrant further examination.

"In the stock market, just like in real life, bad leaders for any length of time can be extremely worrisome. And right now, Cramer thinks the market is looking at the wrong leaders.

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