As a result, he said that overseas stocks that many firms were buying are less attractive and some people "are just literally caught here. The hedge fund trade, just annihilated this morning."
"It is just a futures bonanza people are covering, covering, covering because they really were counting on taper. They were counting on Summers. They were counting on government shutdown ... and now those things seem" far away, he added.
(Related: Summers withdrawal removes pressure to cut Republican deals)
Cramer said that many in the market are "leaning on" stocks in the home building sector, such as Lennar and Masco, while other companies like American Tower and firms in the paper industry are currently experiencing a short squeeze.
One area that has potential are mortgage banks, particularly regional names, said Cramer. "Go back to these mortgage banks that are still not that expensive. … Regional banks, they had been thrown away, they had not participated in this last leg of the rally. You can be in those."
However, the one thing Cramer said he wouldn't chase are some of the strongest stocks in the recent rally. "Are you going to come and buy Starbucks at $77? You going to buy Disney at $68? Is that what you're going to do?" he asked.
He pointed out that Disney, for example, rose 4 percent on news of a stock buyback and that may be a sign that it is overbought.
At these levels, "you come in and you're on quicksand. I don't like to buy on quicksand," he said. "Don't necessarily buy these companies that have been doing well betting on a recession or a slowdown.
(Related: Ready for a pullback? Don't try to time it)
"You're seeing the stocks that had been thrown away come back and those stocks that have gone up through this period of higher rates come back down. Don't be suckered," he added later in the show.