the lvx. that's been telling you something all along. oil volatility index. >> come on, guy. >> thanks so much for watching. see you back here tomorrow at 5:00 for more "fast money." meantime, done go anywhere. "mad money" with jim cramer starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i want fewer days like today. my job is not just to teach you, but coach and educate you. call me at 1-800-743-cnbc. or tweet me @jim cramer. on days like today, will you let yourself be controlled by your emotions or will you stay calm and be guided by reason?

are you going to sell stocks hand over fist every time you see weaker china data? are you going to panic whenever the s&p futures are down huge overnight, as people did most of the day today, just as they did last tuesday afternoon at this time before one of the biggest rallies i've ever seen. or will you decide to care more about the united states than china given we live in the united states, not china. and the two are very different despite the prevailing wisdom if things are horrendous in the people's republic, don't they have to be every bit as horrendous here? that was certainly the assumption behind much of today's decline. dow plunging 474 points, s&p plummeting 2.96%, nasdaq nose diving. let's take everything was weak. regular viewers know, you know that i keep a copy of wednesday october 4, 2011 of the "wall street journal" on my desk.

it's an important day and an important front page. so important when my youngest daughter was cleaning up my office last month, something i'm forever thankful for, i said she could throw away anything except my good scott and this october 4 edition of "the journal." what makes this so significant? lead story, "market nears bear territory, u.s. stocks down almost 17% since april high on europe europe economic concerns." we are only down 10% from the highs. at this pace, we'll be there by friday. don't laugh. probably happens. let's look at some of these headers under the title global economic turmoil. the first story, manufacturing slows worldwide in september. and then it goes on. an ominous sign for the engine that propelled the global economy out of recession. the u.s. saw the sector expand

slightly, but demand remains a concern. okay. we've got manufacturing data this very morning that showed we are operating at the lowest rate in two years. similar. next. look at this one. troubles of belgium french bank threaten u.s. this negative new flashes coming on that same day. get this, euro zone finance ministers reached a deal to provide collateral to finland in exchange for future rates to greece clearing one hurdle to a larger bailout. more things change, the more they stay the same. oh, my, the news was bad, ominous. so bad that, and i quote, "major stock indexes tumbled to open the fourth quarter with u.s. shares approaching the level considered a bear market. it's not the fourth quarter today happens to be the first month of another month everyone says is horrible, september. we've got a real litany of horrors going here, right? this is terrible. you read this, you say it's the end of the world.

what happened the very same day this paper came out? october 4, 2011. would you look at that? the dow rallied 153 points from 10,655 when the paper was printed to 10,808 when the day was done. the dow traded 10,655 the day before this paper came out when the chronicle of this market reached bear territory. you know what that was? it was the bottom. the market never traded lower than that a gloomy chronicle of 2011. this was the last big down turn we had until now. this was it. it ended this day, the day that i guess people thought it was going to begin. you understand why i told my daughter not to throw the paper away? it's kind of a keepsake. first and i quote again, investors blame the drop on continuing fears of european debts which are sewing the fears of a global recession. hey, isn't that what we are sewing the fears of today? global recession? made sense back then.

we had major countries that looked like they would default. italy. third largest bond market. spain, 46 million people 27% unemployed. we were fearful. but we were only 26 days away from rest when mario draghi took over european central banks and reduced bonds save them and us. so many of our banks were on the hook to these countries and banks our economy might have been brought down with europe. our banks were so much weaker because they had only just begun recovery from the great recession and were just raising capital. these days our banks are too flush paying out billions of fines. the best banks in the world. 2011 our banks weren't just vulnerable to europe, they were joined at the hip. how about the current situation with china, how is that like something that drove us to bear territory? we are able to insinuate ourselves good in europe. they opened their doors up. china though, man their hole

point is they don't let us in. they dump everything here with impunity. we would love to, believe me. they won't let us. the chinese party is not crazy bus. how about troubles with that belgian french bank dexia. no, it was the next lehman. no, it wasn't. does anyone remember? maybe you can google it. does anyone even care about dexia? i don't think so. it all resolved itself. how about greece, was that frightening? finally got dealt with. since being finished, that's helping europe's growth rate which is why the euro's gotten so strong versus the dollar. that would be a positive story. i don't want that to get in the way of the more negative story that's the major court.

how many called a bottom october 4, 2011? how many people said this day? i don't recall a soul. i checked. these headlines says, we are going lower, get scared. that's why even though i said yesterday on "squawk on the street" we would have horrible data out of horrible and it would reverberate here in hideous fashion, which it did, i advocated taking some cash out of the sidelines and buy a couple of stocks to a nice discount. i don't know, bold? europe is in good shape getting better. we are heading into a presidential election this year which pumps more money into the economy. oil got slammed, but it can bounce that. makes me feel better having fewer defaults. a bottom may be put in. global growth will be helped by the opening of iran. 77 million people, gigantic amounts of oil. dollar seems to have peaked making for better earnings next

year. our country's economy is stronger than it was back then. brazil is offer. china will get worse. what happened after october 4, 2011? europe kept getting worse, too. the market figured it out and put in a bottom as it will before the chinese market goes to 2200. it's headed there. memo to prc, stop it already. are you kidding me? yeah, it's bad out there. bear market bad. maybe the market keeps heading lower as everything seems so terrible as it did october 4th of 2011. or maybe things start getting better as they did on october 4, 2011. david in north dakota. >> caller: love the show and want to give you the barking is still rocking boo-yah. >> i've been reading the paper that says the balkin is done. >> caller: no when machines have

a hissy fit and sell down stocks, what indicators do you use to determine fair values to adding to a position? >> i actually use the ones that i've been taught since 1982, price-to-earnings multiple. i look at it and hope it comes down to 12, 13%, 12 and 13 times which would be good versus treasuries which are only yielding about 2%. i use that. then in terms of emotion i look at the s&p oscillator that comes out every night. shows we are oversold. don in north carolina. >> caller: mr. cramer, a big boo-yah from north carolina. >> love it. >> caller: thank you for taking my call. thank you for sharing your knowledge and your hard work. >> thank you. >> caller: with the recent state of 6.8% and other large stakes in other companies do you consider berkshire hathaway,

should i hold, buy or sell after getting in around $75? >> remember, i don't care where it's been, i care where it's going to. i have tremendous faith to warren buffett. happy 85th birthday. i think he's got a very good team. he buys a lot of stocks. good prices. has been a terrific operator, too. i'm going to look at berkshire hathaway and say that is not controlled by the shenzhen. what happens tonight in beijing, i bet it's not going to impact nebraska. it's a bear market, okay? get used to that. maybe it gets better. maybe it doesn't. we don't know when a bottom is going to come in. we didn't know when we bot otom last time. get your draft sheets out. there are plenty of bargains on the field in this market. i'll tell you which companies barring injuries, acls all over the place. then i've got a message for the fed you are not going to want to miss. zoe's kitchen up 130% since the

ipo. recent quarter? i don't know. will it sizzle? let's check it out. my take on what's next for the company. stick with cramer. >> coming up -- with the price point hitting all over the charts lately, oil has been one of the hottest topics on the market. cramer's doing a deep dive into the commodity. taking to the technicals to find out where it's headed next. it now the time for you to get in the game and score green with black gold? stick around.

europe's down more than 2.5%. so we're down more than 2.5%. they sold off at their opening, so we sold off at the opening. s&p 500 futures indicated we would be down big off china fears, sure enough that's what occurred. these big surprise swings happen because huge pools of capital whip around the futures. futures obscure the good works of managements of individual companies that might be doing well regardless of the action in the overall averages. the individual stocks of the companies themselves have become play things in the hands of this rapid-fire binary game to buy or sell giant bass of stocks. they are caught in the stocks. right now they are selling them fast and furious. ye we are stuck with these discounts. you can bemoan them or exploit them. i want to talk about exploiting them. my reasoning, okay. put yourself in my shoes.

tonight the "mad money" fantasy football league draft occurs. i spent early part of last night pouring over players, looking at all sorts of orders, who you should take, maybe someone is going to trade ahead of me, i've got to be ready. i've got my list, my guides, i'm all set. i went on espn, i did a mock draft with strangers even. see if i could manage under a tight time frame, spotting patterns, playing probabilities, working out disaster and recovery plans. you know what i did after i finished with that? i did the same thing with my stocks, with my stock list. that's right my stock fantasy list. i'm not kidding. i've got my price points. i didn't know which stocks i wanted to draft at what prices. if it doesn't get to my price, i'm going to pass. the nfl draft does a lot of wild cards do it. are my colleagues going to pick the right players so i can game by the time i get to pick at number 11? maybe they don't know what they're doing or maybe they're

good. when do you pick a defense? how aggressive should i be? when it comes to the stock market, fortunately you have fewer wild cards. you don't have to be with anyone to buy your stock. you are stock is not going to trade ahead of you. you can choose which round you want to buy a stock in. maybe the down 3% how about wait till the down 10% or down 20% or 30% rounds? let the market sell you stocks of unscathed companies and pick them up at reasonable prices, far more than could you in fantasy. why this analogy? simple. somehow we've become totally gun shy about exploiting these opportunities. we like it when they are getting more expensive. unlike fantasy footballs, stocks are in a bear market where you might not want to pick up anything and that is fine. no one is forcing you to take action. you haven't been roped into a league. the snack isn't coming at you. you're never on the clock. that's good. but you know what? it doesn't hurt to imagine yourself as the first one to

draft. that's right. the first pick in your stock league with the unlimited choice of what to buy. s&p 500, nasdaq 00, got the ratios, got how low they've been. let's talk about the right way to do it and wrong way to do it. first recognize the stock market contains pieces of paper tied to the fortunes of companies. not necessarily the fortunes of china. not to the fortunes of europe or brazil. despite what you hear. let's go back to that fantasy football analogy. it is perfect in this sense. when i'm drafting players in fantasy, i'm wary teams would play against pretty fierce and tough opponents. you might not want to draft my beloved philadelphia eagles, because in addition to their own division, i've got to play against the new york jets, miami dolphins, new england patriots, dolphins and jets, good defense. those could be shutdown games. i look at celgene's schedule. it doesn't have a road game in china. netflix doesn't play in china

either. to name two popular sltocks slaughtered of late. i don't think these companies are going to play in brazil no automakers which is a shame. auto are having a good camp, but it's just the domestic camp you see. numbers overseas, they're horrendous. they are losing on the road. so why not own a team that always plays at home? how about at home in a dome? in winter? that's a high quality biotech stock like celgene. at what price? here is a stock that traded at $139 six weeks ago. in retrospect, $139 was a real bad draft. however, the stock is now at $115. it may not be cheap but it's a changed story. different story. more positive one. what round is appropriate to pick celgene at? we can get emotional and decide celgene is scary, no dividend. it's one of these biotechs,

trades wildly. or say let's see. last time around at the lows a week ago, celgene traded at $113. it's only at $115 here. i'm going to wait until a lower round to pick up celgene. perhaps when it trades through $113 and everyone is freaking out it didn't hold. why buy at all? because the scouting report given at a calm moment over a month ago tells us celgene should earn $7.83 this year. that's the real number. not the emotional number. with biotechs, draft looking a few years out. if celgene goes back to $113 or lower, you'll pick this up 15 times 27 earnings. that means this one is a sleeper that could be terrific for your portfolio at that price. remember, you don't have to worry about celgene trading ahead to another drafter. wait till it gets to your level. it's not going to be taken off the board.

use limit orders and that way you won't fear that it's getting away from you. why bother to go through this exercise? what intel, for instance, do we have that could make us pull the trigger on celgene? what do we know? we don't got an adam shefter tweet or fantasy guru. wait a second, celgene closed on its deal with receptos. they got a good price. that gives the summit, new jersey-based team, my home team a balanced attack. its value's gone up as stock price has gone down. say you want something more aggressive than celgene though. maybe you basically have a defensive stock that doesn't have to worry about china. celgene versus something that has worldwide exposure where you might have china. maybe you want to speed through facebook. you check your cheat sheet and see facebook was taken, okay. let me check. it was taken at $83 in that mock

draft last tuesday's lows. i have increasing confidence facebook could earn $4 per share in 2017 after they heard about how many people are checking in each day. that's how i draft, i draft in the future. it didn't hit a low today. maybe you could snag facebook for 21 times those 2017 earnings. all right. the average stock sells at 17 times earnings. that may be expensive to you. maybe i should wait for a later round. no sin in that. it's not that simple. facebook's growing at 29% annual clip. it has all the characteristics of a dez bryant or dell beckham. it's a wide receiver unimpeded by an opposition. whatever place you don't want to play on. you have to pay up to get the growth facebook is offering. you might even have to down $4 and swallow it and take your first bite. i can play this game with any

company. kroger went ought $33 last time around. is where it right now? it doesn't have the explosiveness it needed. it does tend not to get hurt every day. i'm going to pass on kroger. i don't want to go to gopro or tesla. those are too expensive at any price. this is a bearish environment no matter where they trade it. don't want to play them. here comes a kimberly-clark which is interchangeable with a lot of other defensive outfits. it's sitting on the board down $2.50. yield 3.5%. what kicker has that good of a yield. i'm not going in the draft room on a day like today. it's too scary. that's fine. maybe you never want to play this kind of football again. i like to buy my players cheap when few competitors are around because it's a light week. every player getting hammered by the futures including ones with excellent draft picks. no one has been carted off the field with acl on my list. no one given a four-week drug

use suspension or whatever abuse these players suffer from or whatever. maybe we are wrong to start buying here. who says you have to put all your money in one level? this reality business is a much better game than fantasy football. there is always another draft tomorrow. doesn't end tonight. here's the bottom line. we are drafting tonight after the markets with our cnbc team, our "mad money" team after the markets in turmoil special. then what i think you ought to do, if you're finished tuning in, get rid of your stock draft. who knows? barring any injuries, stocks could be selling even cheaper than they were at the close today. >> much more "mad money" with the recent market turmoil. listen to the call in rising rates? you don't want to miss my memo on the fed. >> crude closed down 8%. i'm getting technical to find out where the commodity could be headed when it goes off the charts. it was beloved by analysts.

after its latest quarter, can you stand the heat or is it time to get out of zoe's kitchen? you do not want to miss my take about that incredibly popular restaurant stock. stay with cramer.

look at your screen. look at it.

this is what it looks like, this drenched in red when we think the federal reserve is about to raise rates to an obvious worldwide slowdown led by china. this is what it looks like when the fed tightens while u.s. manufacturing is expanding at the slowest pace if two years. you're seeing the fallout when the fed ignores china, forgets brazil, thinks things are sanguine and christine lagarde is the head of the imf, i think she probably knows a thing or two about the global economy. there is no good time to raise rates. this wouldn't be a particularly bad time to raise rates. there are enough people on the fed who look at employment car sales and say we've done our job. bring it on. that's the rationale. in my view, getting it over with is not a rigorous reason to do anything. i know i'm out of step with all these commentators who say it's time to tighten because things are fabulous. it's ridiculous we haven't tightened.

i'm out of step people think the slowdown in china and brazil don't matter. the fed's job of slowing down the u.s. economy when it gets too hot is being done by the global economic slowdown. look at the data. they don't have to make it so bad it impacts here in terms of lay-offs. it's going to happen all by itself. why are people so worried the fed is being complacent. money managers with bets against the company who don't tell you they profit if the fed tighten up there. they say the feds are scared of their own shadows to move. call me crazy, it's been done. if you ask me, the complacent ones are the soon to be in the majority who says, like my own subtext, damn the torpedos, full speed ahead because he is sanguine about the world. dennis lockhart of the atlanta

fed was sanguine during the time the economy was enduring a total battering. they are the ones complacent. they are complacent about tightening. so complacent i bet they think in their heart of hearts the foolish european central banker was dead right to raise rates twice ahead of the great recession just because that was the disciplined thing to do. hoover was disciplined, too. what is the cost of waiting? manhattan real estate turns too hot? listen to the toll brothers call. that's what you got from them. maybe back to the number of housing starts we had before the great recession. chicken and beef prices. you know the fed can't control the size of the herd or number of healthy birds. tell me what these people are worried about they need a rate hike at this very minute as china goes down another 1,000 points. you read tomorrow's paper. my bottom line is i haven't heard a compelling argument yet. let's just say tightening in an

obvious bear market like we have, leads me cold. how about you? much more "mad" ahead. in july a brilliant technician told me the price of oil would be cut in half. she was dead right. and some analysts call it the next chipotle, but the latest quarter out of zoe'" kitchen causes me concerns. and a special edition premarket turmoil special of "the lightning round." stick with cramer! >> get cramer's final take before tomorrow's trade. coming up on "last minute mad."

if you get another lousy piece of manufacturing data from china, the price of oil tumbled almost 9%. we are in a strange situation where we want crude to go higher and hold steady because there are so many oil companies that could be in real danger if the commodity goes back down to the 30s. i keep telling you, there's $200

billion of debt on these oil markets. when the price of crude is plummeting, everyone thinks something terrible could be lurking in fixed income. tonight we are going off the charts. going off the charts with the help of carly garner, a brilliant technician who is the co-founder of carly trading and my colleague at realmoney.com. for those who don't put much faith in the technicals, garner's record with oil is phenomenal. back in the first week of july when crude was hovering in the $50s, she told us there were big commodity speculators aggressively betting oil would still go higher. she said those weak hands need to be wiped out before the new-found pain in oil would stop. garner told us a mass liquidation could happen. that would send the price of crude down to $41 with a possible quick flush down to the mid $30s before we could bottom. once liquidation was finished,

garner said oil would start heading higher again. sure enough the price of crude plunged down to the mid $30s like she said last week where it promptly bottomed the level garner predicted. before going on a rebound back up to the high $40s, the fastest oil rally since 2009. today though some of those gains were repealed with crude declining down to $45. given garner nailed the bottom in oil, where does she think it's headed next? let's take a gandered a this weekly chart showing the price of west techs crude and commodities weekly commitment of trading report. it tells us exactly how the major players are betting in the oil futures market. cftc divides buyers and sellers into real categories. they hedge to raise cash. small speculators and the group we care about here, the large speculators, that's the big

institutional money managers that set the price to drive the markets. that's who's been driving the markets. during recent decline where the price of oil plunged down to the mid 30s before finding a powerful floor of support, garner points out these large speculators unloaded roughly 40% of their bullish holdings. the problem in early july was that the big money was still way too bullish on oil, but the net long position of 328,000 futures contracts. last week that dropped to a net long position of 200,000 futures contracts. garner sees that as a huge positive. in recent years, whenever the net long position in crude drops to that level, down here, the selling tends to dry up. we typically get a nice rebound. that's how important this is. we are seeing it dry up. as we saw earlier in the years, 2012 and 2013 did the same thing. ironically, the fact that the big boys were throwing in the towel and capitulating near the

bottom, that's why garner now believes the path of least resistance for oil is higher. i know it doesn't look like that. it looks like -- all we do is follow trends. that's not what her interpretation is. think about it. all the commodity speculators who dump their holdings are rushing to put their chips back on the table. even after oil's massive rally last week and factoring today's ugly decline, garner believes there should be plenty of buying power and that will prop up the price of crude. let's zoom out to the long term monthly chart of west texas crude. it will become clearer to you. there was a time when $40 was considered very expensive. okay? think about that. during the early 2000s, oil spent most of the time in the $20s. and then in the $30s. once it broke above $40 a barrel, it kept roaring higher and higher. we haven't looked back since except during the great

recession last week. based on 2003 lows and 2009 bottom, it makes sense it would find support in the mid to high 30s if you look at the relative strength index here or down here, last week oil reached deeply oversold levels we hadn't seen since 2009, the last big bottom. so how about a little history? when oil bottomed to $32 in 2009 it rallied up to $50. remember yesterday? before performing a complete retest of the lows. after that retest, the price of oil more than tripled over the next few years. garner thinks we are likely to see something similar this time around. we have already saw an initial low in late 2014 and early 2015 followed by a big multimonth rally and eventually another pullback to new lows, so based how we bottomed in 2009, garner believes oil has completed the

pattern. yeah. while she can't rule out another dip down to the low $40s or high $30s, garner says as long as the hold above last week's lows, long as they hold, oil will likely find its footing and continue to climb higher, not go lower. she expect a recovery to $62.50. then if oil breaks out above that level, she's been right, she wouldn't be surprised if it makes a quick dash to the $70s or maybe $80s. after last week's wipeout, the charts as interpreted by carly garner suggest oil is ready for sustained long-term rally, not sell-off, despite today's decline. begin she nailed the whole sell-off before in oil, i wouldn't be surprised if she is right again. you better start lining up oil stocks to start buying as we get into the retest of last week's lose. when oil goes higher, the stock market goes higher. "mad money" is back after the break.

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you and your money. top of the hour, i'm with sara eisen and brian sullivan on cnbc "markets in turmoil." it's a special report. you can't afford to miss it. and now it is time, it is time for lightning round. sell, sell, sell, buy, buy, buy. we play to this sound and the lightning round is over. are you ready, skee-daddy? start with ed in new jersey. >> caller: boo-yah! >> wow. >> caller: jim my stock is apple. aple on the new york exchange. >> i think these are good. this thing yields 7%. that is probably wrong. it should be, the stock should be higher and the yield lower. this group has been crushed today. i think it's opportunity. denise in pennsylvania. >> caller: jim, how are you? >> how about you? >> caller: i'm not doing too good today with the stock

market. thank you for all your useful information. my question is about omeros. >> you want to move up the quality food chain. the food chain has come down. lative in illinois. >> caller: boo-yah! halliburton. >> halliburton is getting interesting. i prefer schlumberger because i have more clarity on the deal. i like halliburton. i would leg in right here at $35 would be my first buy. bill in new york, bill. >> caller: hey, jim, my question is on wendy's. when they did the dutch auction and repurchased at $11.45, the stock keeps going down for the last three, four weeks. >> right. wendy's rite aid, a lot of these plays are all going down.

worries about -- these are all worries about cost of labor. i think there is opportunity coming. don't be aggressive. and that, ladies and gentlemen is the conclusion of the lightning round! what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

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different set of rules than the ones that govern the happy-go-lucky bull market from a couple of months ago. you need to be more selective picking growth stocks. that's the area that got hurt today. this environment is more judgmental. to borrow a concept from thomas payne, there are summer soldiers out there, growth stocks that can go higher against a positive back drop but become risky when the back drop turns increasingly negative. take a really good company, zoe's kitchen. that it's once-loved stock, mediterranean theme fast casual restaurant chain. when it became public it was hailed as perhaps the second coming of chipotle which is the benchmark of success in this business. it was a store serving healthy food that appealed to the younger demographic and seemed to have a huge runway of growth ahead of it. especially when you consider it only has 158 locations in 17

states. and can expand more than tenfold to 1,600 locations. when the market was good shape, zoe's went higher. came public $15 in april and finished last year and rocketed up to $45.60 more than five weeks ago. in the late stages of that fabulous bull market of yore. many a 52% gain if you bought in the beginning of 2015. since its peak in late july, zoe's like so many other junior growth stocks has plummeted back to earth. it's down nearly $12, 25%. because the whole market has come down but in this new more discriminating environment, investors find a stock of zoe's, high growth restaurant chain, there are many others we could have included, to be less appealing. how did zoe's kitchen lose its mojo. if you go back to early june,

zoe's was putting up robust numbers. then we got our first warning sign june 18th when the chief financial officer resigned, quote, to pursue other business interests. it's never a good thing when your cfo resigns especially when it's out of the blue. falling from $42 down to $39. mid june the bulls still alive and well. zoe shrugged off the departure and the stock began its climb again. the next month zoe's went back to a market darling surging to a new all-time high of $45.60 on july 23rd. that's when the vicious decline in the averages began. the whole stock market getting pounded. zoe's was crushed falling roughly $10 to $35 and change a month later. fast forward to last thursday though. zoe's kitchen had a chance to redeem itself when the company reported second quarter results after the close. initially the market seemed to like the numbers.

stock surged 3% the next day. it gave back all those gains. selling continued today. what's happened here? was the quarter good like the market seemed to think on friday or was it bad as the markets seemed to think yesterday? when you dig onto the numbers, the answer is zoe's reported results that were good, but not good enough for this tougher new bearish environment. and that's the take away. the headline numbers were certainly strong. zoe's delivered a one cent earnings beat with higher than expected revenues that rose 30% year over year and 5.6% increase in same-store sales. wall street was only looking for 5.1% increase. that's great news. management raised their full year sales forecast. when you looked closer in this kind of market, that's what people are doing, these results seemed to investors as less impressive than the previous quarter. they saw a sharp deceleration in same store sales growth.

that is the thing growth investors hate to see. zoe's 5.6% same stores sales gain represented about a 25% deceleration from that previous plus 7% quarter and 27% deceleration from that previous quarter. to make matters worse, the deceleration was fuelled by a slowdown in traffic. in the previous quarter, zoe's experienced a 3.7% increase in traffic where the latest quarter, traffic increased by just 1.3%. that's a puny figure for a restaurant chain in high growth mode. the vast bulk of same store sales growth came not from additional traffic or higher prices, but for improved sales mix driven by the strength of zoe's off site catering business. get this, you take away the catering component and zoe's kitchen concept where they go to the restaurant and eating food looking less robust. many restaurants would kill for numbers like the one zoe's just reported. zoe's is a high growth chain

with a high-flying stock that many investors and analysts anointed as the next winner in the space. it was supposed to expand like crazy. growth guys loved it. while also delivering strong traffic and top notch same store sales. but people are saying if the existing stores aren't doing as well, then maybe the whole growth story is being called into question, along with the stock's sky high valuation. they may do what they say, but maybe we won't pay for it. four straight quarters of decelerating revenue growth. some of that is the law of large numbers. as the company keeps expanding its store count, each store moves the needle less and less. in this environment, that's become unacceptable. i think zoe's as a company has a lot going for it. even if it's not growing as fast as some would hope, their margins are expanding nicely thanks to lower raw costs and initiatives designed to improve

productivity. they have a terrific huge regional to national story. excellent point. zoe's is only in 17 states with lots of room for expansion. the company's also testing new technology to improve through put at its restaurants. something that boosted sales at many other fast casual chains. these things would make people like the stock if the restaurant group hadn't gone from bullish to bearish and growth stocks are held in contempt. zoe's kitchen, people are realizing, may not be the second coming of chipotle. the stock is still quite expensive versus the others in the group. zoe's is very profitable because it builds out new stores. that's what you want from a growth chain. doesn't make sense valuing a stock with plain old price-to-multiple. if you look at ebitda, that's then you know you are going to get an enterprise multiple that's still high. zoe's is trading at 30 times next year's ebitda estimates.

that is a gigantic premium to chipotle's multiple. or buffalo wild wings. that's around 10. so much more expensive than those good chains we like so much. in this vicious market, it's hard to justify that market valuation with no dividend or earnings protection to speak of. if you want to speculate on high-flying growth stock, it needs to be nearly flawless. it's got to be a flawless performer. zoe's kitchen has so much going for it. it's a good company. it's far from flawless. in this environment, the company's decelerating same-store sales make the stock too risky for me to endorse. i think management is terrific. at least at these levels, though i sure do like the taste of the grub. stick with cramer!

don't go anywhere. i've got you covered after this. we are sticking around for a special you cannot miss. that's with sara eisen and brian sullivan. you are going to get a lot out of it. this is one tough market. there is always a bull market somewhere. i promise to find it for you here on "mad money." i'm jim cramer and i will see you tomorrow.

on the first trading day of september -- >> plenty of red on the screens. >> stocks tumbled. with china in focus. >> in terms of this chinese market, they are who we said they are. >> big drops across the board. energy, financials, technology, getting hit the hardest. >> it's very volatile swings in crude oil. >> only three of the stocks in the s&p 500 finished up today. >> the dow going out with a decline of about 468 points. >> this is a cnbc special report "markets in turmoil. now here's j c