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Blame This for Wednesday’s Miserable Action

On Wednesday, the Dow slipped 12 points, the Nasdaq gave back more than 40, and the S&P 500 lost a full percent. What was behind this terrible action, largely in the latter two indexes? Actually, Cramer told “Mad Money” viewers, there was no good reason for it other than that stocks had run too far too fast.

Some blamed what they said were weak bank earnings, but Cramer saw virtually no problems other than Goldman Sachs. Wells Fargo and JPMorgan Chase reported stellar quarters, he said.

Tech offered no legitimate solution either. One the one hand, IBM rallied off great numbers, while Cree , the LED lighting company, fell $9 off disappointing results.

Then there seemed to be no logical reason for the action in other sectors. Oil fell less than $1, but the related stocks took a big hit. Coal suffered a similar move. The autos, too, sold off, though Cramer’s not sure why. Certainly nothing’s changed since he traveled to Ford’s Dearborn, Mich., plant just last week.

Seeing all this, Cramer looked to defensive plays like Procter & Gamble , McDonald’s and Verizon . He wondered if a newfound slowdown was imminent given how these stocks rallied today, along with Dollar Tree , Ross Stores and TJX , in contrast to the previously mentioned names. Still, he didn’t see it. Sure, we got weak housing starts, but that’s nothing new.

So what actually happened here?

It was just typical of the kinds of days we get during earnings season. After a steady rise in the averages, investors used any excuse to take profits. Bad numbers from Goldman? Sell, even JPMorgan and Wells. Cree disappoints? Sell again, even Apple and Amazon . This is why Cramer always warns viewers away from trading during earnings season. Because timid investors can jump ship at the slightest whiff of what looks like a poor headline number.

Cramer’s recommendation, then, is to use this weakness to buy the best names, the companies that already reported solid numbers. Think JPM, AAPL, WFC. These stocks aren’t down for fundamental reasons. No, the underlying businesses are sound. It’s the market that’s put these shares on sale, and you should take advantage of it.

Whatever you do, though, don’t think Wednesday’s action was indicative of a larger trend. It was par for the course after a good run in stocks. We always see days like these during earnings season, so you can’t afford to take your cue from this so-called “action.” Instead, just use the dips as buying opportunities.

Cramer thinks another such opportunity could come Thursday given the inline numbers F5 Networks reported after the closing bell. Investors, the “Mad Money” host included, expected much more from this high grower, one of Cramer’s F.A.D.S. C.A.N. The pin action could ripple out to many of the Internet names. The smart move, then, is to find a name you like in that space and get ready to buy.

“I’m urging you not to have an existential crisis because you can’t explain today’s sell-off,” Cramer said. “We simply had reasonable people who took profits rather than let the market take them away. We had more sellers than buyers. They’re giving us a chance to get into great stocks like JPMorgan and Ford at prices, well, frankly, we didn’t think possible a week ago.”

When this story published, Cramer's charitable trust owned Apple and JPMorgan Chase.

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