Though the market didn't bounce back completely on Tuesday, it did at least check off a few boxes on Jim Cramer's market rally checklist. So could the market be in for more pain? He thinks that it took at least a step in the right direction.
The (.SPX) and Nasdaq (.IXIC) ended up slightly on Tuesday, finally breaking a three-day string of losses, while the Dow (.DJI) finished lower over concerns on the global economy. The Dow Jones industrial average fell 5.88 points, 0.04 percent, to 16,315.19, while the S&P 500 gained 2.96 points, or 0.16 percent, to 1,877.7. The Nasdaq Composite added 13.52 points, or 0.32 percent, to 4,227.17.
"I am a huge believer, and I say it every night, that there are always better moments to sell than into panic," he said.
Cramer recommends waiting through the bounce, though it was short lived on Tuesday, before selling. More than anything, the "Mad Money" host added that this bounce only gave investors a chance to catch their breath and change their course of direction.
That's right, Cramer said it's time to do a course correction. There are just too many unresolved issues on his 10-step checklist that need to be resolved in order for the market to have a sustained rally.
Investors tend to assume that when the price of oil tanks, as it did today with its $4 decline, than there must be something wrong with the fundamentals.
What if it the oil market is just like the stock market, and the buyers and sellers are actually controlling the market?
Cramer doesn't think this is a ridiculous idea. He suspects that the real force that is controlling the price of crude is the buyers and sellers themselves, as a result of forced liquidations and margin calls among overly bullish hedge funds. To gain further clarification the "Mad Money" host turned to Carley Garner, technician and co-founder of DeCarley Trading to explain how this could really happen.
According to Garner's research—based on a chart of the West Texas crude that shows CFTC's commitments of the big institutional players—in June, speculators were holding net long positions in crude futures. When the price in oil began to fall, the speculators in the market began to suffer losses as a result. However, the hedge funds selling crude did not sell, and are now being forced to sell because they bought these future contracts on margin. Now that the value of these contracts has dropped, the margin clerks at investment banks are requiring them to put up more capital or sell their positions.
Garner indicated that the price of oil may continue to go down until these forced liquidations are completed. "Worse case, Garner sees oil bottoming in the high $70s, and at that point, she expects a big rebound, because crude is already in incredibly oversold territory that almost demands a bounce," Cramer said.
Here is the good news: Cramer thinks that as soon as the weak handed bulls have finished selling, the markets will reverse when they are flushed out.
There is one quick-service restaurant that has embraced the technological landscape into its business model, and is reaping the benefits by moving full steam ahead with profits in pocket.
On Tuesday morning, Domino's Pizza reported a stellar quarter, and the stock rose 11% to an all-time high. The company delivered a 2 cent earnings beat on higher than expected revenues that rose 10.5% year over year. The cherry on top of the ice cream sundae, was that Domino's posted a 7.7% rise in its domestic same store sales and a 7.1% increase in international same store sales, which was much more than what the market was expecting.
"These numbers were phenomenal, which is why I think the stock deserves ever single penny of today's gains," Cramer added.
Following the hot topic of energy on Tuesday, Cramer spoke with Chairman and CEO of Continental Resources (CLR), Harold Hamm to find out what the recent prices in crude mean for the North American energy renaissance.
Continental Resources specializes in oil and gas exploration, and thus is in the center of the energy battle. As the price of crude has collapsed, Continental has seen its price in stock plummet down 27 percent as a result.
Cramer dove straight in and asked Hamm what could be causing the tumbling prices of oil, whether it is a matter of excess supply or slower demand.
"We are in a good position here in the US. Because we do have production growing and coming back, and there will always be turmoil in the middle east. What if we didn't have this energy renaissance going on the US and all of the turmoil in the middle east? We would see higher prices, not lower prices. What we have done is lower the world prices," Hamm added.
When asked about his perspective on the direction of oil prices, Hamm stated "$60 oil, I don't believe it. In fact I think oil will be back at $90 before you know it. The Saudi's aren't going to do it for too long. A lot of speculators do have the wrongside of the trade. If they keep on going, it will bite them ... I think we are very close to the bottom. I thought it was probably $85."
Hamm has graced the pages of the news recently with his pending divorce settlement from wife of 26 years and former attorney, Sue Ann Hamm. She has pressed the court to divide as much as $17 billion, primarily held in Continental Resource stock held in Harold's name that has accrued since 1988 when they were married.
Harold Hamm commented on his divorce to Cramer, saying "I'm glad to have that behind me. It's not going to effect the company, I'm glad to say."
However Continental still remains one of Cramer's favorite energy plays. "At some point, players like Continental will have to cut back on their drilling. Of course, if the price of oil bounces back that makes Continental cheap, and worth buying right now. But until then, maybe some pain," said Cramer
Though gas prices may be independent from oil prices, these days they are having an impact on the entire energy space. Cramer also spoke with Charif Souki, the visionary chairman and CEO of Cheniere Energy (LNG), to find out where this company is headed and if the stock can hold its head above the murky waters of the market. Souki provided an opposing view to Hamm.
"Since we last spoke, a few things have happened. We are drilling mostly for oil in this country. So now gas is an associated product, so the price of gas does impact us on whether we are going to continue to produce gas and oil or not," added Souki.
The "Mad Money" host then noted that gas market in this country is very different than the rest of the world, it's not really competitive with oil. So where does this leave the price of oil in the future?
Souki stated "I think the price of oil could go to $70, and maybe even lower. You need to look at will the US export oil or not, because we seemed to be saturated with staying in the United States right now. The infrastructure simply cannot take the oil anymore from production to the refineries. We have saturated the ability to move one place to another."
Cramer continued to determine if the market bottomed today, by taking a look at a few caller favorite stocks.
Honeywell (HON): "If you take a long term, then I'm going totell you yes. If you take a short term,then I'm going to tell you that the chart says this stock goes to $80"
Actavis (ACT): "We like Actavis, we like the acquisitions they have made and we think they're doing a terrific job. That said…I do want to buy into their correction"