Mad Money

Cramer: Nvidia and Twitter's stocks are the best examples of the unforgiving market

Key Points
  • "Mad Money" host Jim Cramer uses the stocks of Nvidia and Twitter to explain the stock market's treacherous condition.
  • Cramer addresses Tuesday's late-day sell-off and gives investors advice on how to handle the pain.
Nvidia & Twitter best examples of unforgiving market

As stocks sold off dramatically into Tuesday's close, CNBC's Jim Cramer knew investors were asking themselves a critical question.

"Was yesterday's rally an aberration, with today's sell-off being the real deal continuation of last week?" the "Mad Money" host said. "Or was today's sell-off just part of some sort of overall retest that we need to expect after an exuberant Monday?"

For Cramer, zooming in on the sell-off's key contributors was the best way to get a handle on why the major averages halted their recovery.

"In all honesty, I think this market has become downright treacherous," Cramer said. "The best examples of [that] are Nvidia and Twitter."

On Tuesday, shares of Nvidia tanked after the semiconductor manufacturer announced it would suspend testing of self-driving cars on public roads.

The move was made in response to a fatal accident last week with an autonomous vehicle from Uber, one of Nvidia's clients.

"The self-driving car is crucial to the next leg of tech because it uses so many semiconductors, but today's reckoning really focused more on Nvidia than any other," Cramer said, touting his upcoming Thursday interview with Nvidia CEO Jensen Huang.

"I have no doubt that self-driving cars will ultimately be adopted en masse, but there's no denying this accident was a huge setback," the "Mad Money" host said.

Cramer also argued that Nvidia's move to halt the tests and vet its chips for potential problems was responsible.

"I believe Nvidia's longer-term story remains intact," he said. "However, I expect it's not done going down for the moment."

Twitter's stock pain on Tuesday came from an entirely different tech-related dilemma: Facebook's data scandal reverberating through the rest of the social media space.

Short-seller Andrew Left, who runs Citron Research, told CNBC on Tuesday that he was shorting Twitter because of the increased focus on data privacy and the notion that Twitter would be the most adversely affected by regulations on the space.

"The company has denied that it sells anything confidential, but Left insists that it's the most vulnerable of the three," Cramer said, referencing Left's midday interview on CNBC's "Closing Bell."

"By that point, the stock was already down more than 10 percent, and Left argued that Twitter's vulnerability was self-evident or else it wouldn't have gone down so much," he said. "That's some ridiculous circular reasoning, ... but it worked. The stock closed down 12 percent."

And even though Cramer has liked the stock of Twitter lately, he said it was proving to be fragile.

"Stocks that have moved up a lot can go down a lot. What matters is whether they find their footing," the "Mad Money" host said. "For the moment, though, tech has lost some of its most powerful themes and we're still mired in all sorts of big-picture fears from Washington. But the bottom line? We really need to get used to these wild swings that send stocks plunging after any major rally."

WATCH: Cramer unpacks the multi-faceted sell-off

Cramer: Nvidia and Twitter's stocks are the best examples of the unforgiving market

Disclosure: Cramer's charitable trust owns shares of Nvidia and Facebook.

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