With the price of crude taking a nosedive after a tremendous run above $30, Jim Cramer wanted to get a sense about where major oil stocks could be headed.
"I'm a big believer in the lower-longer thesis — the idea that crude will stay down, likely for the rest of the year until he hedges expire at most of the American producers — but there's a lot of emotion invested in which way oil is going to jump," the "Mad Money" host said.
That is why Cramer turned to Robert Moreno, a chartist, publisher of RightViewTrading.com and a colleague of Cramer's at RealMoney.com. Specifically, Cramer was interested to know what the charts indicated for the large integrated oil and oil service plays if crude holds above $30.
Overall, Moreno found that the technicals were sound for Exxon but is skeptical that the stock could continue to roar higher. Until the volume gets more positive, he suggested holding off.
Next up was Chevron, which was much more compelling for Moreno. Last week, the stock finally broke above a key level of $85 and is only a few points away from another ceiling of resistance at $89. Ultimately Moreno was more bullish on Chevron than he was about Exxon.
But it was the biggest losers of the oil patch that worried Cramer, as he thinks if oil drops to $10 it is the financials that have a large amount of energy exposure could be the true oil victim, second to the oil stocks themselves.
Industrial stocks have been the big ugly ducklings of the stock market for ages. And if anyone would have told Cramer 48 hours ago that a company would take a run at $75 billion United Technologies, he would have thought that was insane. But it happened, and it was a big wake-up call for Cramer.
With oil and bank stocks hated badly in the market, Cramer was intrigued by industrials. When CNBC's David Faber broke news of a possible merger between Honeywell and United Technologies on Monday, it prompted Cramer to take a fresh look at the cohort.
"No, I am not a fan of Caterpillar … but wait a second, if some company were big enough to take a run at this $38 billion behemoth that sells at almost half that it did not that long ago, doing so with a long view, I can see how that deal would make sense," Cramer said.
Cramer speculated that he would not be surprised if talks surfaced surrounding companies such as Eaton, Cummins, Deere and Alcoa.
This might seem like a tall order, but Cramer is willing to consider that the industrials could make a turnaround.
And there have only been a few times this year when Cramer thought that a company really got it. Though these occurrences are very few and far between, he was absolutely mesmerized by Home Depot on Tuesday.
"Apparently we have just enough Home Depots, just enough to generate spectacular 8.9 percent same-store sales growth, I don't know if I have the ability to explain just how amazing that is," the "Mad Money" host said.
And guess what? Cramer thinks it can get better. The company is now forecasting 1.9 million new households, up from 1.3 million next year.
"All I can say is, wow!" Cramer said.
One stock that was hit hard on Tuesday was Chegg, the small-cap company that started by renting textbooks, and has since expanded as a provider of digital services for students. It offers services that range from homework help, to assistance with picking colleges, getting scholarships to selecting courses.
However, Chegg's stock was in the house of pain when it plummeted 35 percent Tuesday following a mixed quarter with guidance for next quarter that was significantly weaker than expected.
To learn more, Cramer spoke with Chegg's chairman and CEO, Dan Rosensweig.
"Going through a transformation of a company is extremely difficult. Doing it in a public market is even more difficult, and doing it at very volatile times is even more difficult. However, the transition is actually underway and quite successful," Rosensweig said.
And even though the market was ugly again on Tuesday, Cramer thinks it is safe enough to dig through the rubble of stocks that were laid to waste in the huge market-wide sell-off that occurred in the past few months.
Covanta is a waste disposal company with an edge on renewable energy, as it can turn approximately 20 million tons of garbage into enough energy to power 1 million homes. It also has a significant metal-recycling business.
The stock has been crushed, down 42 percent from its highs in May 2015 as the company has suffered from issues such as the drop in commodity prices, which hurt the metal-recycling business.
However, Cramer interpreted it as a great sign of confidence when Covanta CEO Stephen Jones purchased 15,000 shares in the open market for himself last week.
"I think that right now the market misunderstands our stock a little bit. We are trading much like an energy company, but if you look at the revenue streams of the company two-thirds of the revenues come from the waste side," Jones said.
In the Lightning Round, Cramer gave his take on a few caller-favorite stocks:
Micron Technology: "No, we are not going to touch Micron. There is just no need. We've got really good high quality stocks like Skyworks Solutions that are down. We don't need that one."
Fortinet Inc: "The only one of these that we are recommending right now is Palo Alto Networks, and you have to understand that stock is very richly valued. This is not the kind of environment where we can take chances. But Fortinet did have a very good quarter."