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Stop Trading!: Fed Will Cut Again Before Next Meeting

Tuesday, 5 Feb 2008 | 3:59 PM ET

Tuesday may have been a "very sobering day" for Wall Street, Cramer said, but bull should take heart. It's all a part of the process.

Speaking during today's Stop Trading! segment, Cramer explained that the huge gains the market's seen recently just weren't sustainable. He's expecting the sell-off to continue another couple of days before it turns up again.

So how do investors play it? Cramer recommended buying Verizon Communications when its dividend yield reaches 5%, then buying more at 6%. That type of buy-and-hold strategy won't work for a Deere or Monsanto , though, Cramer pointed out.

This environment is "paradise" for short-term traders, he said.

Stop Trading, Listen to Cramer!
Mad Money's Jim Cramer shares his stock picks with CNBC's Erin Burnett.

Stocks can be bought when they've lost 50% to 60% of their gains and then sold again when during the next big market move. "Just pay attention to the various trading oscillators out there," Cramer said.

If Cramer had his choice, though, he'd buy foreign stocks on weakness before he bought domestic equities. As confident as he is that the Fed will turn things around -- now that they've woken up to the realities of the economy -- but "everybody else is nowhere near as bad as we are," he said. If investors get a decline in Europe, then buy Europe. The same goes for Mexico, Brazil, Argentina and so on.

All the talk about another intermeeting rate cut, "that's in the cards," Cramer said. The economy's so bad, they have to cut. They can't wait a couple of months."

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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