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When Do You Buy This Market?

Thursday, 20 May 2010 | 9:07 PM ET

As bad as Thursday was for the markets, with the Dow plummeting 376 points and the S&P 500 losing almost 4%, Cramer still isn’t bullish on most stocks.

“It just hasn’t come down enough to make buying compelling,” the Mad Money host said, “or even particularly secure.”

No Man's Land?
Why you can afford to wait it out, with Mad Money host Jim Cramer.

He likened the Dow to a stock. If any other stock soared to $11 from $6.50 and then pulled back to just $10 – which is the same track that the index has followed since March 2009 – most investors would wait for it to dip to $9. And that’s just what is happening now.

“We’re barely down for the year,” Cramer said. “Despite the grinding agony of the action, we’re hardly in anything called bear-market territory, down just 10% from our high. Frankly, it’s a totally normal, run-of-the-mill correction.”

He might take a different approach if the market leaders that worked after that March 2009 bottom – oil, banks and tech – were working now, but they’re not. So we’re in a bit of a “no man’s land.” Stocks are down, but not enough to make them attractive. In fact, he’s only recommending accidentally high-yielders for the time being.

They won’t be attractive either, Cramer said, until “something truly bad happens,” meaning European governments and banks finally capitulate and that situation is resolved. Once we get that, though, “You cannot be as negative.”

3M serves as a perfect example. The stock yields only 2.6% and trades at 14 times earnings with a 12% long-term growth rate, a slight premium to growth. It isn’t particularly cheap, and the uncertainty in Europe and China could mean the earnings estimates are too high.

When will triple-M be a buy? Not until the yield crosses 4% or it trades through that growth rate. Also, Cramer said he wanted to see proof in the charts that the stock has held at this level before. And, most importantly, we need those bad events to happen. Then the odds will be better. Until then, you can afford to wait.

“We’re still in no man’s land,” Cramer said. “No reason to get aggressive.”

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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