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Cramer: Dow 8,260 as Downside Target

Don't succumb to negativity. That's Cramer's mantra for a market where fears of European contagion and other crises continue to drive stocks down.

"Keep your head up and look for opportunity," said the Mad Money host. "You can’t see it if you succumb."


Following the worst May in 40 years, there is temptation to throw in the towel, Cramer admitted. Stick to a downside target of Dow 9,500. If Europe should collapse, the downside will be Dow 8,260 as calculated by his "bottoms up look" at each component. He remains cautious, but said "there is a price where the market becomes reasonable to invest in, we just haven’t found it yet."

So how do you muddle through? Stay diversified by owning stocks that have nothing to do with the various crises, Cramer said. He recommends keeping some cash until the downside target is reached. Also, own gold as insurance because Cramer thinks the chaos will send it still higher.

"Buy accidentally high yielders, stocks which used to have low-yields that have become high ones as their share prices went down," Cramer said. "These are unusually safe dividends because they were never meant to be large."

Cramer said you can earn much more in higher-yielding equities, especially after taxes.

Bottom line: Stay in the game.

"It will eventually reward those who buy high quality stocks with good, safe dividends," Cramer said. "It always does."

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