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Cramer: Beware of the Soft Patch

Thursday, 14 Apr 2011 | 8:27 PM ET

"Soft patch alert!," Cramer said Thursday. "Everybody's worried about a soft patch, but no one is sure whether to stay the course or panic."

Soft Patch Alert
No one's sure whether to go forward or pull back in this soft patch. Either way, the trigger pullers are recalibrating their world view, says Cramer. And people are saying things have turned for the worse. Fortunately, Cramer has a different take.

The big hedge funds, however, have decided that April is a soft month, Cramer said. In their minds, the world's economies have already taken a turn for the worse.

Everything had been going great until end March when business cooled off, Cramer noted. From increased unemployment claims to high foreclosure rates, there are numerous signs that we came into April cold and are now flatlining. Cramer said these issues are coalescing into an
"ugly moment," where the market doesn't know what to do. Yet there are already signs the market is being viewed through a "soft patch" prism. Alcoa's earnings report on Monday was mislabeled as "disappointing," for example. Similarly, JPMorgan Chase reported a decent quarter, but it's stock took a hit when an executive said a dividend hike wasn't
in the works.

Not to worry, though, Cramer said. In his 30 years of experience, he said soft patches tend to be self-correcting. Commodity prices don't rise forever. When people substitute some commodities for others, the targeted goods collapse in price. In other words, we may have already seen the highs in oil.

Meanwhile, China has been raising rates for a longtime. Cramer doesn't think the Chinese government will let its economy stall for long because its citizens will become unhappy. Therefore, he thinks China's economy could soon fire up again.

Cramer also thinks the Japanese recovery will get underway sometime soon. They have to rebuild infrastructure, power and homes because the country is just not working. That needs to change.

There are opportunities now, too. High-growth stocks, like Chipotle Mexican Grill and Deckers , are flirting with highs. These stocks triumph as the underlying companies can put up good numbers even during a soft patch.

Finally, Cramer thinks gold will bounce back, as it tends to do when there's signs of inflation.

"The bottom line: don't let the soft-patch alert rattle you," Cramer said. "Let the self-correcting part of the economy be put to work for you along with the super fast-growers and gold, raise more cash in intraday rallies and wait for me to tell you when the soft patch ends.
They always do."

When this story was published, Cramer's charitable trust owned Alcoa.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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

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