Mad Money

Cramer: Heed Apple, Icahn and Twitter

Market wants true value: Cramer

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

If you're trying to get a handle on what this market is all about, Cramer says look no further than Apple and Twitter.

"While Twitter's stock was falling apart, Apple's was advancing," Cramer said.

The "Mad Money" host believes the price action speaks broadly to what should work in this market as well as what may not.

David Paul Morris | Bloomberg | Getty Images; Getty Images

Looking at Apple's morning rally, Cramer says the advance was all about positive commentary from Carl Icahn and recent earnings which were better than expected.

"Here's Icahn, a hard-bitten opportunist who has taken many a profit with far less of a gain, saying he's not a seller of Apple. Despite its long run from below $400 eleven months ago, Icahn's not cutting any Apple loose. That's quite a statement."

Cramer thinks the Street took Icahn's commentary as a signal that Apple is a value stock.

"It still sells for just 14 times earnings when the average stock in the S&P sports a 17 plus price to earnings multiple. That's cheap given Apple's prospects. And the company is buying back billions of dollars' worth of stock."

This market wants value and with Icahn's seal of approval, shares traded above $600 intra-day for the first time since November 2012. (It should be noted that Apple ultimately closed lower)

Twitter, however, is exactly the opposite. Cramer says this is the kind of stock that was bid higher on growth potential but has now fallen out of favor.

"After peaking at $73 in change back on December 26th, Twitter has been a death star, just horrendous. There had been lots of worry about the lock-up, which just expired."

That means insiders, holding as many as 470 million shares, can start selling as of today.

And to make matters even worse, showed a key metric, user base, wasn't growing nearly fast enough to satisfy the Street.

Insider selling and challenged growth are trespasses this market will not forgive. By the close, Twitter had declined 17% to a new 52-week low.

If you're an investor, Cramer believes you'd do well to heed the message in the price action of these two stocks.

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"Apple and Twitter are the perfect metaphor for what's going right and what's going wrong in the stock market, what's loved and what's hated, who's making money and who's costing you a fortune," Cramer said.

"lt suggests that a stock can go higher in this market if it represents real value. However, stocks that are only supported by growth and not solid profits could remain flimsy for some time to come. "

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