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Cramer: Scaling the Stock Market Gauntlet

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Investors do battle every day in the stock market. But few go into battle as well prepared as Jim Cramer.

And on Thursday's broadcast, the Mad Money host detailed 4 questions every investor must reconcile, in an attempt to stem the gauntlet and ultimately arrive in the promised land of stock market gains.

- Is the company beholden to Europe to make its numbers?

"Pretty simply, almost every industrial's got exposure to Europe, and that goes double for the technology stocks, " said Cramer. "This is what's behind the vast majority of the hideous shortfalls we've seen in company after company that's involved in the computer business, particularly those in the personal computer and dumb phone food chain. But it's also snared the usual winning suspects like Google and Avnet."

- Does it have exposure to the election and the fiscal cliff?

"A big upside surprise this week came fromBoeing, which jumped a buck and half, all the way up to $74 and change, and has been down ever since because people perceive that its defense business will be crushed by a Congress that can't avoid the fiscal cliff -- or confluence of tax hikes and spending cuts that go into effect as soon as January." Read More: Romney Would Be Better At Avoiding the 'Fiscal Cliff': Goldman
"Plus, Romney's been making a ton of noises about how he'll fix the deficit while still allowing more military spending, but Obama hasn't said the same. So no one cared about Boeing's upside surprise and the stock can't seem to stop going down," said Cramer.

- Can the stock weather the China test?

Economic data released by Beijing can either send stocks soaring or tumbling, depending on what the data reveals. In other words is China lowing? Or is China slowing so much that Beijing will introduce new measures to stimulate the economy?

"If China were to turn around, then this part of the gauntlet can be breached. But every piece of Chinese data has the potential to call the whole enterprise into question," said Cramer.

- Can the stock survive expectations?

Cramer calls this portion of the gauntlet, "the most miserable portion of all." Take for example earnings released by Tractor Supply, a rural retailer that caters to farmers and gardeners with lower-priced, high quality products.

"The company beat estimates and raised its forecast—formerly the holy grail of earnings that almost always causes a stock to go higher. Yet, Tractor Supply simply because it didn't beat enough and raise enough given that that stock was already up 33% going into the quarter," said Cramer.

"If Tractor Supply had been flat or down, that combination would have sent its stock up huge. That's exactly what happened at Procter & Gamble, which led the Dow on a beat and raise that was only a fraction of what Tractor Supply delivered. But Procter was up a lot less going into the quarter, so it was much easier for them to clear the expectations hurdle," explained the Mad Money host.

What's the bottom line?

"I can't recall when the gauntlet to go higher has been this rigorous and difficult," said Cramer. "But it's a fact of life -- at least until Europe gets better, China gets clearer and the fiscal cliff gets resolved."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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