Cramer: These 7 things must happen for the market to get back on track

CNBC's Jim Cramer still saw plenty of room for improvement in the market on Tuesday as stocks recovered from Monday's rough sell-off.

"This market's going to need a big machete to carve a path forward for the bull. It will not be easy," the "Mad Money" host said. "The obstacles to going higher are legion. But that doesn't mean that nothing can go right, it just makes the gauntlet more difficult."

At a glance, Cramer could see seven things that could send the market higher in the near term.

The Federal Open Market Committee meeting at the Federal Reserve, the first for new Fed chair Jerome Powell, was Cramer's opportunity No. 1.

Cramer argued that Powell has to say that the economy is strong, but not too strong — just healthy enough to create a lot of jobs.

He also said the new Fed chair should avoid any questions about President Donald Trump except to thank the corporate tax overhaul for sparking growth.

"Then, Powell has to defend the rate hike," Cramer said. "He can say he sees incipient inflation — not more than that, please, but enough to remind us that we need to get interest rates back to more normal levels."

The "Mad Money" host also wanted to hear from Powell that the increasingly digital economy, fueled by the likes of Amazon, would contain any over-inflation that could occur.

"In other words, Powell needs to justify the rate hike as a preemptive strike against the kind of inflation that could come with a fast-growing economy, even as it hasn't really come yet," Cramer said. "He can't be tone-deaf to the dangers of lockstep rate hikes, but if he wants to, he can tentatively commit to three and the market will love it."

The cloud kings, Cramer's newly defined market leadership group, also have to regain their strength for a sustained rally to occur, he said.

So far, so good: much of the sector soared even after software giant Oracle reported what many saw as a weak quarter on Monday.

"It's amazing that the market's reaction was not to think that Oracle's cloud slowdown infected the whole group," Cramer noted. "Workday, Salesforce, ServiceNow, Splunk, Red Hat, VMware, and, most importantly, Adobe roared higher, with the latter seemingly in an uncontrollable romp."

"If tech keeps acting as a leadership group, that helps enormously," he added.

Investors also need clarity on the European Commission's proposal to tax U.S. tech giants including Amazon and Google parent Alphabet on their digital revenues, Cramer said.

"We need to hear that these taxes could be as high as 2 percent, no higher, because anything above that will jeopardize the nascent move in Amazon ... and continue to roll back the price of Alphabet," the "Mad Money" host said.

Some clarity from the president on his newly proposed tariffs could also help stocks recover, Cramer argued, especially if Trump decides to sit down with Chinese officials before moving forward.

"I've been a major advocate of pushing back against China's unfair trade practices. I've been calling them a paper tiger. But it's better for everyone if we can resolve this amicably rather than taking the trade war to the next level," Cramer said.

Fifth, Cramer said that the rally in retail stocks must continue.

"I particularly like the action in some of the mall-based outfits like Abercrombie & Fitch, American Eagle [and] Urban Outfitters. Kohl's is climbing all the way back — told you to stick with that. Nordstrom, Gap, Macy's, they were horses into yesterday's downturn," the "Mad Money" host said.

Cramer also highlighted the strength in suppliers VF Corp., PVH and Estee Lauder and the relentless rallies in Target, Home Depot and Costco.

Cramer also called for Facebook's top brass to "come out and issue a ton of mea culpas" for the fallout about Cambridge Analytica, a firm that created Facebook ads for the Trump campaign in the 2016 election, reportedly mining data from 50 million users without explicit consent.

"If Facebook starts being smart, its stock will stop going down," he said. "But the fundamentals won't matter until management changes the narrative by pretending to have some humility."

Finally, the "Mad Money" host wanted to see some action in both the market's potential takeover targets and the acquirers whose takeovers might have fallen through.

"General Electric needs to sell a division to Emerson Electric pronto," he said, nodding to his Monday interview with the CEO of Emerson. "Broadcom needs to announce a gigantic buyback."

"Bottom line? We have about 24 hours to fight through this thicket," Cramer said. "Machetes at the ready, the path traced out, the extrication point can be reached, the LZ's hot, but it's a terrific place to lift off from."