The stock market on Tuesday was jam-packed with so many shocking upside earnings surprises that Jim Cramer was left astonished.
"It is important to remember that the magnitude and number of upside surprises versus downside letdowns can often determine the direction of the day," the "Mad Money" host said.
The best beat by far for Cramer was Burlington Stores, which had a history of blowing away the numbers and then raising its forecast, with analysts aggressively following along. However, this can be dangerous because eventually analysts will want to get ahead of the upside surprises to show the company isn't just trying to manufacture the surprise, Cramer said.
"The expectations were high, but when Burlington reported this morning, it was astonishing," Cramer said.
The only retailer that exceeds Burlington is Children's Place, Cramer said, which was up again for a third straight day.
Dollar Tree surprised as well, as it took estimates down only to beat them the next time it reported. Its last quarter was considered a disappointment, but it changed course when it reported an earnings beat with a 1.7 percent same-store sales increase, while Wall Street was only looking for 1.4 percent. The stock roared more than 8 percent on the news on Tuesday.
The golden question on everyone's mind right now is when the amazing Trump rally will run out of steam. Unfortunately, Cramer does not know the answer to that.
The good news is that the market can give hints, as long as a trained eye knows how to look for them. That is why Cramer enlisted Mark Sebastian to take a look at the relationship between the averages and the CBOE Volatility index, known as the VIX for short, which measures the level of volatility that traders expect in the near future.
"In times of euphoria you need a non-emotional gut-check, and as the technicals … suggest that we could still be in the early innings of this rally," the "Mad Money" host said.
Many investors also use the VIX as a fear gauge, as it can provide insight during times of panic or euphoria in the market. Sebastian is a technician who is the founder of OptionPit.com and colleague of Cramer's at RealMoney.com. He also happens to be an expert at reading signs for the VIX.
Sebastian found that right after President-elect Donald Trump's surprise victory, the VIX fell as the market climbed. That was a sign that investors believe in the rally, and it isn't finished yet.
Home Depot's CFO Carol Tomé told Jim Cramer that every morning she gets up paranoid, ready to fight the competition. Especially when it comes to a rebounding housing market.
"As home prices appreciate, something happens with the home owner. They think of the home as an investment and not an expense, and they spend differently in their home," Tomé told the "Mad Money" host.
For most people, a home is the largest investment that they have. Thus, as home values increase, the homeowner feels like it is worth more and it encourages them to invest more, Tomé said. During the financial crisis, homeowners weren't interested in spending much, as stress from mortgage payments weighed them down. They would maintain their homes, but wouldn't invest, Tomé said.
Another surprise was Corbus Pharmaceuticals, which is a development stage biotech company with a stock that has more than tripled this year. While the stock could be speculative, it spiked 50 percent in one day on positive results for its drug Resunab, which is used to treat the autoimmune condition called systematic sclerosis.
Part of the bounce was because the stock sold off hard going into the data, as Cramer noted some money managers expressing skepticism of whether the company's key drug really works. He spoke with Corbus's CEO Yuval Cohen, who explained that the drug caused excitement in the field based on much stronger signals than anticipated from the study,
Typically in a phase 2 clinical trial there isn't likely to be statistical significance, according to Cohen. That wasn't the case for this drug, he said.
"We got statistical significance for the overall improvements, as well as certain time points. That to us sends a very clear and a very exciting, honestly, signal of clinical benefit," Cohen said.
In the Lightning Round, Cramer gave his take on a few caller favorite stocks:
Gilead Sciences: "Gilead has to do something! They have to use some of their cash to buy someone, because they have no growth. And I cannot recommend a biotech stock that has no growth."
California Resources Corp: "It has finally taken off. This is a spinoff. I prefer higher quality oil companies. I go over them all the time, but I think the service company Schlumberger, which my charitable trust owns, is an even better bet now that California Resources has moved so much."