Cramer: The Market Is Being An 'Extremist'

If the stock market were to be summed up in one single word it would be "extremist" — at least according to CNBC's Jim Cramer.

What Happened

The use of the word "extremist" to describe the stock market may raise some eyebrows, but Cramer said during his daily "Mad Money" show Tuesday that the word is justified. In Cramer's view, the market is merely rushing "from one extreme to the other, sometimes in the same day."

For example, Nasdaq stocks started Tuesday's market session with a "screaming rally" thanks to Alphabet Inc GOOG GOOGL's earnings report — and no other reason, Cramer said. While the "Nasdaq party" was underway, industrial stocks were declining for the sole reason that "traders made up their minds that things weren't so hot" and aren't going to wait for the group to release their earnings, he said. 

Why It's Important

The end result was the Dow ending Tuesday's session up by nearly 200 points and the Nasdaq index ending slightly in the red, Cramer said. This trading action is not only "extremist," but frustrating as one company's strength, such as Alphabet, shouldn't by default lift shares of unrelated companies higher, the CNBC host said.

Similarly, a point of weakness in one sector shouldn't result in a sell-off in sectors that are more likely to "weather the storm."

What's Next

The major takeaway is that "extremes have to be avoided," Cramer said. Investors should keep in mind that is important to "try to figure out what's going on before you take action."

Related Links:

A Peek Into The Markets: US Stock Futures Flat Ahead Of Earnings

Alphabet Is Still In Very Early Stages, Morgan Stanley Says

Photo by Tulane University via Wikimedia.