Trading the Street’s Change in Strategy

What are investors to think when, under the pretense of an otherwise flat day in the markets, some of the best-performing companies out there are left behind for laggards? How can this season’s earnings winners be shunned while total losers end the day higher?

Blame sector rotation, Cramer said Tuesday.

Right now investors are pouring out of strong, cyclical names like Caterpillar , 3M and United Technologies and into defensive plays like Johnson & Johnson and Kimberly-Clark , even if these latter two missed a quarter or cut full-year guidance, which is what each did, respectively.

Behind the moves are a number of different factors. First, the industrials have had a good run, so they are selling off. On a more severe level, though, investors reacted to news that commodities were trading at a one-month low, with both gold and oil prices down. They didn’t like the consumer confidence number either, with that at a five-month low, which is why they took down J. Crew , Kohl’s and Best Buy .

And there’s also employment, another huge factor here. Cramer said the Street assumes that Thursday’s unemployment claims and next Friday’s jobs number “will be terrible,” so money managers are taking profits now.

All of this shows why investors have given up on the more economically sensitive stocks — the CATs, the 3Ms. They are pulling back for fear of the worst. Notice all of a sudden the roaring utilities, a sector known for its safe and consistent gains. Con Ed , Progress Energy and Southern Co. wouldn’t be hitting 52-week highs for no reason, even if it does look like cap-and-trade is dead. Because Verizon and AT&T , which have nothing to do with Obama’s hoped-for legislation, are up, too.

Given this market shift, how do you play it? Well, if you’re “all in” on the cyclicals, take some profits. Lock in those gains while you have them. But if you’re diversified, as Cramer says you always should be, then do nothing. That’s right, nothing. There’s no reason to get caught up in what he calls the Wall Street fashion show. At the most, take advantage of lower gold prices to build a position if you don’t already have one. Consider buying some gold coins or the SPDR Gold Shares exchange-traded fund.

“Every portfolio needs some gold in it just as insurance,” Cramer said, “if only because gold tends to go up when everything else is going down.”

Call Cramer: 1-800-743-CNBC

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