Cramer Remix: Here's the real reason the market had such an aggressive snap-back

  • "Mad Money" host Jim Cramer dissects the action behind the averages and uncovers the reason for a wild trading session.
  • Cramer also hosts another sell-off strategy session and drills down on the state of the oil market with the CEO of Core Laboratories.

CNBC's Jim Cramer noticed on Monday that the stock market's 1,000-point sell-off was being exacerbated by some particularly "toxic" trading instruments.

"The velocity of the decline, well, that was absurd. This is important if you want to get your head around why we were able to snap back so rapidly this afternoon," the "Mad Money" host said. "I think the velocity of the sell-off was directly related to some abstruse financial instruments that ended up putting a ton of additional pressure on the actual S&P [500]."

Cramer was specifically referring to the VelocityShares Daily Inverse VIX Short-Term exchange-traded note, or XIV, a small trading product that lets people short the VIX, the market's volatility index.

When the VIX started to rise on Monday, the XIV shorts started to unravel, leading to a tail-wags-the-dog effect that sent the broader market into a tailspin faster than expected, Cramer said.

Off the Charts: Five years of FANG

The FANG stocks: Facebook, Amazon, Netflix and Google
Adam Jeffery | CNBC
The FANG stocks: Facebook, Amazon, Netflix and Google

After several days of a rapid-fire sell-off that rattled global markets, Cramer and technician Bob Lang took to the charts to prove that some stocks are still worth investors' time.

Lang, the founder of ExplosiveOptions.net and one of the three market minds behind TheStreet.com's Trifecta Stocks newsletter, specifically called attention to four of the market's most recognizable names.

"Here's the thing: almost exactly five years ago, Lang had this idea for a cute acronym that would sum up the hottest growth stocks around, FANG — short for Facebook, Amazon, Netflix and Google, which has since become Alphabet," Cramer said. "I liked the idea so much that I shamelessly adopted it. Some would even go so far as to say I stole it."

The "Mad Money" host admitted that the FANG stocks, like most, were not immune to the market-wide sell-off. But in the last five years, their gains have been staggering.

Apple's rebound

Tim Cook
Adam Jeffery | CNBC
Tim Cook

It's no secret that Cramer has long been a fan of Apple, both the stock and the company.

But on Tuesday, Cramer doubled down on his love for the iPhone maker after its stock finished the day up more than 4 percent, or $6.54 a share, following several days of dramatic declines.

"What makes this all the more impressive is the fact that Apple's stock is coming back even as it's under constant, enfilading fire from the so-called analyst community," Cramer said. "Ever since the world's largest company reported last Thursday, delivering strong top- and bottom-line numbers but a lackluster iPhone sales forecast, the long knives have been coming out."

"But I think Apple is at its best when the analysts are at their worst," Cramer quipped.

Sell-off strategies

In a caller-filled strategy session, Cramer went back over the causes of the sell-off and what it meant for new investors in the market.

"Let's remember, January was the most that the public has been in [the market] in years and years," he said. "And because I think they're in because of the tax code change, we got overheated and now we're cooling off."

But Cramer told investors to keep a close eye on the stock market, which often hints at the moves it will make before it makes them.

"The market always speaks directly to us. It tells us things after big declines. It shows you what's going to bottom and lead us. And what it showed you was it's going to be technology," Cramer said.

Core Laboratories CEO says oil prices could still go higher

Rising oil prices mean profits for a host of traditional oil and gas producers, but few companies serve as niche a purpose as oil service technology play Core Laboratories.

"I don't think we've taken market share, ... but what we've done is we've created some market share," Core Laboratories Chairman and CEO David Demshur told Cramer on Tuesday. "We're creating new markets for Core Lab to thrive in."

But with careful commodity-watchers still hesitant about the surging price of crude, Demshur offered a bullish take on the state of the oil market over the near term.

"You keep between $60 and $80, we're very happy on that," the CEO said. "If you look at worldwide production, the world has drawn on inventories now 17 months in a row. So worldwide inventories are now right around 40 days of supply. Usually, at that level, you start to get very stable oil prices. Once we dip below that 40-day in inventory, we start to get increases in crude prices and we think that's going to happen over the next six or so months."

Lightning round: The one snag with CAG

In Cramer's lightning round, he shared his take on some callers' favorite stocks:

Conagra Brands: "It's fine, Conagra. The problem is that there's no real thesis right now to buy these food stocks other than [on] a takeover basis and I don't recommend stocks on a takeover basis."

AeroVironment: "I think that there's a private company that I know that also does agriculture. They do have agricultural drones that actually, I think, may be able to give this company a run for the money. I like the military side more than the ag side. It's down 15 percent, about, for the year. Call me a buyer, not a seller."

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