Cramer Remix: Oil's next victim
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The market turned ugly this week, as Jim Cramer saw the same elements that wreaked havoc in the past return. Once again, the strong dollar and lower oil have managed to sink stocks. "Perception always trumps reality, at least initially. Sooner or later, though, we will settle into a fact-based situation where we can try to make money off of what is actually happening, not the bogus nightmare scenarios that are so easily traced out," the "Mad Money" host said. Crude has now declined more than 20 percent from its recent highs. Cramer found it remarkable how much investors didn't care when oil plunged to $40 a barrel from $50. The entire market still moved higher as it happened. However, when oil dipped below $40 a barrel last Friday, black gold once again coupled with the averages and took stocks down. This is because of a growing belief that auto companies, which reported weak sales on Tuesday, are signaling a slowdown and the weak oil market signals the same thing, Cramer said. Where does that leave stocks? If the market is once again tied to the price of oil, Cramer expects the banks to fall next if oil continues to plummet. While he doesn't think this is a real concern, he still wants investors to be prepared if it happens.

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Cramer spoke with Carley Garner, a technician and commodities expert who is the co-founder of DeCarley Trading, author of "Higher Probability Commodity Trading" and Cramer's colleague at RealMoney.com. Garner found that the sell-off in oil has occurred in an orderly fashion so far, which is why the stock market ignored it and didn't fall along with it at first. However, as crude heads lower, she expects the weak-handed bulls to get washed out, crush oil and send the stock market even lower. "Once the smart money gets wiped out ... Garner thinks oil can start rallying again, which would be a welcome sign for this market," Cramer said. First, Garner said investors should brace themselves for more damage. In her experience, bottoms in oil tend to be very dramatic and painful as weak-handed bulls are flushed out. Unfortunately, she said the market hasn't seen a real washout yet. She expects oil to fall to $38.50 or even $32.50 a barrel if things get worse. She thinks it is more likely that oil will push its floor of support at $34.50 a barrel, and if it holds, then crude will rebound.

Cramer also had a memo for investors. When CEOs of major companies says the environment has become tougher, they really mean it. No, it is not just small-talk. Last week Ford Motor CEO Mark Fields acknowledged the auto industry faced a difficult environment. Ford's monthly sales numbers were released on Tuesday and indicated a 3 percent drop, even though the consensus expected only a 0.5 percent decline. As a result, Ford's stock plunged more than 4 percent. "This, to me, is where I find the obvious nature of investing so unnerving," he said.



