Making Sense of This 'Ridiculous' Market

This is a "bad rally," Cramer said Tuesday with Dow up 213 points and the S&P 500 closing 2% higher.

Stocks jumped, even though there was a flurry of bad news out today: The Empire State Manufacturing report showed no hiring. Best Buy's weak sales of expensive tech, discretionary purchases like televisions, showed little consumer confidence. Homebuilding confidence numbers could be interpreted to mean housing could soon take a "nosedive." Plus, it appears as though Greece could default.

But the markets rallied only because of short covering, Cramer said. Once the shorts are done being picked off, though, he thinks stocks will stop climbing.

The market right now is "stupid and hated for a very good reason," Cramer said. Attitudes changed after the "flash crash," where the Dow dropped nearly 1,000 points on the afternoon of May 6. As soon as the market's integrity was violated, people stopped believing in prices. Things are made worse with the notion that "what happens in Europe is more important than what happens here," Cramer explained. Similarly, he wondered how rising oil prices are seen as bullish, even though "everyone who drives knows that is a bad thing."

Sure, every now and then something will make sense, like tech stocks jumping because they are so cheap. But the fact that this market rallies on nothing but bad news, Cramer said, means that “this move is based on quicksand.” And he thinks it will last only as long as it takes for a big seller to realize that things aren’t as hot as they seem and starting dumping stock, high-frequency tradres quickly abandon their bids so there are no buyers underneath and those infamous double- and triple-leveraged exchange-traded funds reappear.

To protect yourself from capriciousness, go with Cramer's C.A.N.D.I.E.S.:

• Chipotle
• Apple
• Netflix
• Deckers Outdoor
• Intuitive Surgical
• Express Scripts
• Salesforce.com

He likes this group of high-growth stocks because while too will go down with the rest of the market, he thinks they will be the first to snap back. Also, look for accidental high-yielders like DuPont and others that Cramer has recommended.

"We need to accept the fact that everything that's happening can be wiped away in an instant, just like it rallied," Cramer said. "It's all based on nothing, or at least nothing good."

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