"Powell changed his mind once; he can change his mind again," Cramer said Tuesday. "If he sees enough positive data and enough bullish action from the stock market, it just might convince him that the economy can handle another rate hike, and one sooner rather than later."
Rallies in the retail stocks often serves as "good anecdotal evidence that the consumer is still spending," he said, while an uptick in housing could give the Fed exactly what it needs to keep tightening with the purpose of avoiding inflation.
"These stocks are climbing because investors expect a pause on rate hikes, yet the Fed could easily use the strength here as a justification for more tightening, perhaps as soon as their February meeting," Cramer warned.
If that happens, "we know we're paying too much for both groups," he said.