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How to Play the Fed Meeting

The Federal Reserve may be heartless, but it’s not clueless, Cramer said tonight on Mad Money.

Cramer was hoping for a rate cut to alleviate pressure in the market, but he got barely a wink from Bernanke and company, who carefully acknowledged that the situation in the markets is less than stellar. Still, though, this subtle nod to the Street put the Fed on track for what Cramer thinks will be a rate cut in October.

“Today we learned that the Fed is no longer in denial,” Cramer said, “and that’s a pretty good thing to hear. When we heard that ‘the downside risks have increased somewhat,’ that was a good thing. It showed me they’re not nuts. When they told us that ‘credit conditions have become tighter,’ that was a great thing. You and I knew that, right?…and it’s good to know that the Fed knows. Bernanke may be an academic, but he’s clearly not a fool.”

The Fed’s statement today was enough for the market to rally a bit, Cramer said, adding that the Street now knows Bernanke is ready to act, though maybe not as quickly as most would like.

Even if the Fed doesn’t make a move, the door is now open for government to do so. Cramer said Treasury Secretary Henry Paulson or even the president could ask Fannie Mae to take action to help so many of the households that are suffering under today’s tight credit conditions.

Cramer expects a change in bias from the Fed as well. The next time the Federal Open Markets Committee meets he said credit should be their primary concern and not inflation. Then comes the rate cut.

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In the meantime, stay away from the three crisis points: banks, brokers and homebuilders – at least until there are estimate cuts and rate cut. In fact, Cramer recommends selling the financials before the estimate cuts start.

Also, play defense. Remember the portfolio Cramer laid out last week: Celgene, Medco HealthSolutions, Kellogg, Schlumberger and Kimberly-Clark. These are the names that should outperform in a slowdown, Cramer said.

Lastly, Cramer said to buy the bull markets that have strong overseas exposure: oils, agriculture and infrastructure.

The aerospace and defense sector is taking a breather, Cramer said, making a good buying opportunity for investors. Tech was off today, “but that won’t last long, judging by the fantastic quarter that Cisco reported after the bell. I think that should give us a fantastic rally in tech, starting tomorrow.”

Questions for Cramer? madmoney@cnbc.com

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