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When the Dow takes a 370-point hit like it did Tuesday, investors want to know why. But the why doesn't matter, Cramer told viewers today. What's more important right now is the rhythm of the markets.
This rhythm or pattern we're in -- short, sharp rallies as the Federal Reserve cuts rates followed by a fear-of-recession fueled sell-off -- will continue until those rates are cut low enough that people are confident the economy's going to improve. This trend "trumps nearly everything," Cramer said.
So don't think a slowdown in the services sector caused today's decline. Tuesday was just a natural correction after the market's 1,000-point gain over the past 10 days. "You can't rally that much and expect it to continue to go up even in the most bullish setting," Cramer pointed out. Soon enough, though, the sell-off will end and the rally will start again.
And you can't blame investors for taking profits in stock that saw healthy gains over the past couple of weeks, namely Bank of America [BAC
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], Washington Mutual [WM
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], VF Corp. [VFC
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] or Ryland Group [RYL
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]. Anything else, Cramer said, would have been unprudent.
But if this ebb and flow continues, how should Homegamers play it? Cramer's been recommending the move of money from oil and techs to dividend-paying stocks that offer protection against days like today. Also, with the Fed actively working to boost the markets, the banks, brokers and retailers should lead the charge back up.
The rhythm Cramer described today should hold until we see some price appreciation in residential real estate, he said. All the bad paper -- the collateralized debt obligations -- need to bottom. The Fed can't stop cutting rates until then, and that means "many more days like today."
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