The market saw two diametrically-opposed rallies Wednesday, bewildering many investors.
"We had huge rallies in all of the recession and recession-resistant stocks at the same time as we had gigantic advances in the stocks of companies that are most geared to worldwide expansion," Cramer said. "We had fabulous runs in the kind of high growth stocks that prevail when we are in a severe slowdown and we had magnificent moves in the stocks of companies that usually get trashed in that environment, the minerals, mining and resource stocks."
Cramer saw this as a good opportunity to explain how "illogical and counter-intuitive" the market can be.
The archetypal recession stocks, for example, benefited from European leaders lacking a plan to cure Europe's debt crisis. In turn, people ran to safe stocks, like Allergan , Colgate and Heinz .
At the same time, though, a lot of industrial-type stocks rallied. Caterpillar , Cummins and United Technologies , for instance, all rallied. Oil plays went higher, too. Being as these companies are tied to global growth, why would they rally when concerns over Europe's debt woes only continue to grow? Executives heard from JPMorgan's chairman of global markets, who said Wednesday the Chinese are done raising interest rates, Cramer said. With the Asian markets having been quieted by seemingly endless rate hikes, these markets could now be waking up.
"She’s thinking that some of these numbers that are about to come out, including the Chinese consumer price index, as well as the industrial production and retail sales numbers are going to show a slowdown pronounced enough that the Chinese communist government will relent and maybe even think about cutting the deposit reserve ratio, basically a number that determines how much banks are allowed to lend," Cramer said of the JPMorgan chairman.
China drives all parts of Asia, Cramer said. Should the CPI drop when it's released Thursday, Cramer thinks all kinds of stocks will push higher. Wynn Resorts , which operates casinos in Macau, could see gains. The mineral stocks, like Walter Energy , Cliffs Natural Resources and Alpha Natural Resources may also catch gains. The oils also react to Chinese strength, so they may also continue to climb.
And it doesn't stop there. Chinese consumers plays, like Coach and Starbucks also fared well. Technology stocks are on a good run, too.
So what's the bottom line?
If China gets hot, Cramer doesn't think everything will continue to work. After all, why would an investor hold onto Colgate when Caterpillar starts owning earth-movers again?
When this story was published, Cramer's charitable trust owned Caterpillar and Cummins
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