There were expectations all over the place on Tuesday, and Jim Cramer knows that when that happens there will be some very exaggerated moves on the market.
"Today these moves were all over the map, and the volatility is insane because the expectations are proving to be so wildly off base," the "Mad Money" host said.
Bizarre expectations were also set for the largest company in the world, Apple. It reported some very good earnings Tuesday evening. There were many rumors that there would be a slowdown in iPhones because German semiconductor supplier Dialog Semi indicated that business had become weak.
As a result, many investors presumed that Apple had been doing badly.
"Oops, the read-through was once again wrong, and that's why Apple managed to put in a decent after-hours showing instead of going down big as many expected," Cramer said.
Or how about DuPont? Cramer was absolutely aghast at the horrendous quarter reported by DuPont on Tuesday. But even as shocked as he was, DuPont's management was even more appalled. The company basically said in its statement that everything is on the table, and it will do whatever it takes to maximize value.
Expectations were unfulfilled but because management proactively addressed the issues, DuPont rallied almost 3 percent on its horrendous numbers.
Back when airline stocks were flying higher, Cramer considered ultra-low cost carrier Spirit Airlines to be the hottest of the hot airline stocks. But lately the stock has been taken to the woodshed, down more than 50 percent year-to-date. What the heck happened?
Cramer thinks the stock had a brutal decline on Tuesday partially because the company warned about a volatile pricing environment on the same day that competitor JetBlue raised its full-year-capacity-growth forecast.
"In other words, it seems like there is too much competition in the airline space, and that puts real pressure on pricing," the "Mad Money" host said.
However, considering that the stock is only trading at eight times next year's earnings estimates, Cramer wonders if Spirit has taken enough of a beating already. To learn more, he spoke with Spirit Airlines CEO Ben Baldanza.
The CEO explained that not too long ago, the general consensus was that consolidation was good for the airline industry because it limited capacity increases and put capacity more in line with the industry's cost of capital. As a result, that kept pricing stable.
"Since we have seen a big drop in fuel from late last year, it seems that consolidation didn't have much to do with the stability of the industry. It was really high fuel prices that kept people disciplined," Baldanza said.
A week and a half ago Gildan Activewear, the large apparel maker many have never heard of but have probably worn its products, was caught in a crossfire between two analysts with very different opinions.
Since that time, the stock has been hammered with many more bearish arguments joining the case.
"Here on 'Mad Money' we love these analyst gunfights, because the best way to learn about a stock is when you've heard both sides of the story, from the well-informed bears along with the well-informed bulls," Cramer said.
When Cramer researched further, he found that the same analyst that upgraded Gildan at Credit Suisse was the same one that downgraded it in August. That made Cramer think that this upgrade from Credit Suisse deserves to be taken seriously.
However while Gildan does remain a powerful story, Cramer suspects that the current weakness in apparel could take the stock lower in the short term.
Thus, he recommended that until there is better news out of the retail sector, this stock should be avoided.
With the price of crude pulling back recently, Cramer has seen many of the gains from the recent rebound in black gold go right down the drain. That is why he thinks it is important to revisit the oil patch and find out if the rebound is gone forever.
The "Mad Money" host turned to Robert Moreno, a chartist and colleague of Cramer's at RealMoney.com, who is also the publisher of RightViewTrading.com. Cramer's goal was to get a better read on the two most important subgroups of the oil patch — the large integrated oils, like Exxon Mobil, and the oil service companies, like Schlumberger.
However, Moreno now sees Exxon coming down from its recent high and thinks investors should reappraise the entire group. So, even though the big oil companies led the energy rally earlier in the month, he now says that they are ready to pause and consolidate.
But that doesn't mean there will be a sell-off in oil. Instead, Moreno predicted a change in leadership. He anticipates that as the big oil companies consolidate, the oil service stocks could be ready to breakout.
Cramer has also noticed that the telco stocks seem to be in a league of their own lately, with each one having its own distinctive quirks and sets of opportunities and pitfalls.
"Unlike many other groups, it's truly up to the individual to assess which of these stocks fits you best considering the variables involved," Cramer said.
So, that was why he decided to assess AT&T, Verizon, Sprint and T-Mobile individually to highlight the pros and cons of each stock.
The menu included Sprint, which was the riskiest. Cramer rated AT&T as a tough call because its cash flow isn't as hefty as its 5.66 percent yield. He finds it curious that the stock is down 1 percent for the year, considering that the company raised its forecast.
"More important, if Google or Comcast, the parent company of this network, or another firm gets in on the game then I think you could see an acquisition of Sprint or T-Mobile," Cramer said.
As for T-Mobile, Cramer is more interested in its leverage. Once it finishes its big spend Cramer thinks that it should be there geographically. That means that the numbers in 2016 could be very good, and T-Mobile could be great for investors seeking growth.
In the Lightning Round, Cramer gave his take on a few caller-favorite stocks:
Energy Transfer Partners: "All I can tell you is that they just boosted the dividend the other day. So, you may think it may not be safe, but they did just boost it. And so it's hard to imagine them boosting it and then cutting it."
Soufun Holdings Ltd: "It's a Chinese stock and I don't recommend Chinese stocks on the show. Not until I get a little more clarity from the party. If the party wants to give me a call and tell me that it's time to party down, I will. But right now the communists are too hard to figure."