With such volatile swings to kick off the first week of 2016, Jim Cramer is ready to switch from capital preservation mode to capital appreciation mode — something that needs to happen before a sustained rally can begin. Especially for Petrobras, which Cramer considers to be the worst stock in the world.
"I've put together an extensive checklist of the things that need to happen before we can be more concerned about making money than we are with not losing money," the "Mad Money" host said.
Cramer selected 14 events that need to occur in order for the market to find a bottom, and stocks to stop endlessly losing money:
No. 1 Federal Reserve must change its debilitating narrative that it adopted after the first rate hike. While Cramer understands that the stock market is not the Fed's main concern, the Fed needs to know its own strength and recognize that when it speaks about the need for four more rate hikes in 2016 — that creates tremendous uncertainty. Cramer wants the Fed to be more data dependent, not just on employment, but other factors such as deflation and slowdown in various areas of the economy.
No. 4 Commodities need to bottom. The persistent deflation for all commodities has caused entire countries to derail, not just their stock markets. Materials such as copper, tin, iron and aluminum remain in free fall because of China. This has created an environment that cannot be invested in.
No. 5 Oil must stop going down. Bankruptcies and reorganizations must occur this year because a lot of companies are in distress. Players such as Petrobras, Chesapeake and Freeport-McMoRan are running out of capital and may have a hard time paying debt.
"It all comes due in 2016 if oil doesn't stop going down, and I don't think it will without a huge geopolitical crisis occurring in the Middle East," Cramer said. (Tweet This)
If there is one thing that is clear to Cramer these days, it is that the love for momentum stocks is quickly fading — especially Under Armour.
On Monday the stock received the ultimate indignity when Morgan Stanley downgraded the stock to underweight, the absolute worst thing that could happen to a stock. Worries accounted for the almost 7 percent drop in the stock on Monday. In Cramer's opinion, the real problem with Under Armour's stock is the valuation.
Even after the severe decline, it still sells at roughly 55 times 2016 earnings estimates and 43 times next year's numbers. In comparison, the average stock trades at just 17 times earnings.
The problem is not just with Under Armour, though. It's all momentum stocks. This group refers to high-flying stocks of companies that have a history of analysts aggressively raising numbers after they report. The stocks are priced for perfection.
"Once the spell is broken, once people start to believe that the growth rate is decelerating, momentum buyers flee because they have no idea how to value a stock with declining growth rate. You can be a momentum stock if you are losing momentum, and that is Under Armour," Cramer said.
Read More Cramer: How to stop Under Armour's vicious decline
One company that can't seem to get any respect in this market is Alcoa. It reported an upside surprise on Monday, and the market yawned over the news because it thinks the company acts like a hapless commodity maker.
However, Alcoa has taken dramatic action when it announced it would split in two: creating a commodity producer and an aluminum technology company with a tendency towards aerospace.
To find out more about the quarter and what could be next for the company, Cramer spoke with Alcoa CEO Klaus Kleinfeld.
"In general, I would say yes, we have worked very hard on the value add side to be positioned in those markets that have growth. And on top of it, we actually have accelerated growth on those end markets because we are aluminizing these places," Kleinfeld said.
The second half of 2015 was a very difficult time to own any kind of a roll-up company. Those are defined as companies that make a series of acquisitions in order to grow. It was particularly difficult for pharmaceutical roll-ups after drug prices went under fire as a politically contentious issue.
And while some companies like Valeant did deserve the beating it received, there were also high quality roll-ups that were punished as well. Horizon Pharma was one of those companies, down more than 55 percent from its high six months ago.
"At some point though, I think Horizon will have to stop going lower off of politically suspect headlines, simply because the numbers here are so strong," Cramer said.
Horizon has made various smart acquisitions, which has allowed it to now have a host of fast growing drugs under its umbrella.
To learn more, Cramer spoke with Horizon CEO Tim Walbert.
"Over 95 percent of our patients are paying less than $10 for their medicines, Jim, and we are trying to do the right thing to create that access," Walbert said.
In the Lightning Round, Cramer gave his take on a few caller-favorite stocks:
Groupon: "No, it's way too early to buy Groupon. You don't want to touch that thing yet."
EPR Properties: "I like it. Especially since they've got the casino angle, 6.3 percent yield. That is the kind of stock I want people to buy."