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Behind the drop: Cramer’s critical catalyst

If you think the sharp declines in the market were all about Alibaba and Yahoo!, Cramer thinks you're missing something critical.

"Oh sure we can call (Monday's drop) a hangover from the Alibaba party but that would only be half the story," Cramer said, especially since a significant part of the weakness involved metals, mining and the energy complex.

Instead, Cramer thinks declines were also triggered by commentary from China. "The government talked about how it is content with the slowing economy and may not feel the need to do more to stimulate," Cramer explained.

Because growth in China is tethered to the industrial and energy stocks, Cramer believes weakness in those two sectors supports his outlook.

All told, that would seem like the end of the story, except, in this case, there's a second chapter.




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Cramer wonders if pros really understood the message China was sending; specifically, if they understood the context.

"Last week the Chinese cut the equivalent of their Fed funds rate and also injected huge reserves, both of which are very positive for their economy," Cramer noted.

Do pros understand that? If they don't, the commentary Monday would have sounded much worse that it was.

Given the context, "For China to stimulate on top of last week's stimulus doesn't make sense," Cramer said. Again, do pros get that?

Although there's no way of telling for sure, weakness in energy, mining and materials stocks would suggest it's at least a possibility that they don't.

Therefore, "I would take a step back," Cramer said.

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That's not to say Cramer thinks the market is without challenges; he also says the stronger dollar could present headwinds, especially for commodity-related stocks.

However, if this selloff sends your favorite stocks tumbling, rather than run for the hills, "I say buy the good ones," Cramer said. Like so many other selloffs, this one could also present opportunity. All told, "I still think it's still business as usual."

(Click for video linked to this Mad Money segment)

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