The crucial pattern between oil & the market

Restaurants couldn't save the market on Monday. Biotech couldn't save the market, and even good news from Europe couldn't save the day. With new territory in earnings season launched and oil running wild, Jim Cramer sees that we are in day-to-day mode. Every day is a different ballgame.

"We are still under the jackboot of oil, where, when oil goes down quickly investors run for the hills," the "Mad Money" host said.

At first, Cramer thought Monday would be a day to run with the bulls when he saw Europe was rallying. Then a parade of horribleness ensued when four gut-punches took the market down.

A pedestrian walks past a Tiffany & Co. store along Wall Street in New York, Jan. 12, 2015.
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A pedestrian walks past a Tiffany & Co. store along Wall Street in New York, Jan. 12, 2015.

First was oil, which went down to the lowest level seen since April 2009. This sent every group down except restaurants, who are the direct beneficiary of low oil prices.

But then there were three more punches straight to Wall Street's gut. First was Tiffany's horrendous miss in earnings, which resulted in a 14 percent decline in the stock.

In another retail blow, SanDisk had a major shortfall in numbers compared to what was expected. It blamed retail weakness for the miss, and that stock also dropped 14 percent. Every component stock was torn to shreds, too. Hardware stocks like Western Digital, Seagate and Skyworks all tanked.

"I know it could have been worse. But it sure didn't feel so hot if you owned anything semiconductor or gadget related for that matter," Cramer said.

The last blast was totally unexpected. A seat mileage shortfall from American Airlines. What?!

The Tiffany punch was understandable since people just didn't buy diamond rings with extra gasoline money. And maybe SanDisk was explainable. But American Airlines? That's just crazy, as it is a direct beneficiary of low oil.

"All of the airlines had to get hammered. It was ugly. Uglier than Peyton's arm. Uglier than Aaron Rodger's leg. Just nasty," he added.

And the damage done just didn't relate to retail, tech and airlines. A new low price in oil took down everything with exception of restaurants and biotech.

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"Many of the more positive folks on oil are taking that as a sign that we're close to a bottom. I have to come back to the fact that so many people are trying to call a bottom in oil that it feels to me like a bottomless pit of bottom callers!"

With the mixture of news swirling in the market, Cramer wants investors to remember the typical pattern with oil: On the first big decline, the market gets slammed. Then it will go down again and consolidate, and the market will stabilize. When the next set of earnings is released, the market is day-to-day and either rallies or falls.

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