“When you've seen it all before,” Cramer said Wednesday, “today's sell-off … [doesn't] look like the end of the world. I find it more like an opportunity to buy terrific stocks at lower prices.”
Instead of panicking, even in the face of the Dow’s 265-point decline and the S&P 500’s 32-point loss, investors should be studiously looking for which third of the market will bottom on Thursday. Because that’s always what happens in these situations, Cramer said. A day after a big loss, some segment of the market finds its footing.
Even after a crash as big as that of October 1987, we got a bottom in the pharmaceuticals stocks. When the Nasdaq would drop 4% to 5% on a single day during 2000, the following trading session would see a bottom in food names like Corn Products. And in March 2009, those high-yielding master limited partnerships that Cramer likes so much—think Kinder Morgan Energy Partners —found the bottom first.
Given these historical trends, Cramer recommended following a similar strategy on Thursday, at least for the latter two. Cisco blew up after the Wednesday’s bell? Try Sysco the food distributor. And consider those MLPs, too. Or look for what he called coiled springs, stocks like Apple and Cree , and buy some deep-in-the-money calls on them. Then there are the stocks that slipped in share price despite reporting solid quarters, such as 3M or Disney . Or try Consolidated Edison or Federal Realty , just because Cramer likes them.
He thinks these names will recover midday on Thursday as most investors regain their senses after Wednesday’s sell-off. But first, most likely, will come an early-morning plunge thanks to the bad news we got from Cisco. Investors then should consider using that continued pullback to get in before the rebound, as there are always some buyers for quality merchandise after the market stabilizes.
When this story published, Cramer’s charitable trust owned Apple and Cisco Systems.
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