Jim Cramer waved goodbye to September and a horrendous third quarter on Wednesday. The market declined almost 10 percent during that time, and every rally turned out to be a trap or a sucker's game, even though it ended on a positive note.
"We did not see a lot of buying today, we just saw an absence of selling. They are different, and a pause in selling can take us higher, but not so high that it is worth plunging in with both feet," the "Mad Money" host said.
Cramer pointed out that investors are still in a bear market that needs to run its course. And most of the bear markets that he has lived through had to do with overvaluation, coupled with a shock to the system that created the wave of stocks for sale.
This bear market is certainly similar. Stocks did get expensive, but that is because interest rates have been so low. However, valuations have not been insane.
The best comparison that Cramer finds to this bear is from 2011, when stocks plunged 17 percent from peak to trough, even as though many stocks far exceeded that decline.
"If a 2011-style bear market plays out, I believe that the Dow is roughly 1,000 points away from hitting what could be an intermediate term bottom, and the has another 90 points to fall…before we can get a long-lasting bounce," Cramer said.
That bounce will allow for some serious reconfiguring if the issues behind the chaos do not go away. That is why Cramer identified places of weakness that must be resolved in order for him to be bullish once again.
No. 1 Stocks need to come down to levels where it would be ridiculous to sell. Unfortunately, they are not there yet, but Cramer said we may be further along than most people think.
No. 2 The Fed needs to make up its darned mind already. Right now, the Fed has created an environment of uncertainty, and that is never good for stocks.
No. 4 The dollar must stabilize and stop strengthening. While the euro has been growing stronger versus the dollar, emerging markets have been a source of pain.
No. 5 China has to break out of its funk. That means actual industrial production must rise.
No. 6 Energy has to stabilize. This will take the pressure from the high-yield bond market, which is being crushed by refinancing from many energy companies.
No. 7 As earnings are reported next month, investors must analyze whether the estimates are too high. If they are going to be cut, then stocks will fall.
Read more from Mad Money with Jim Cramer
When all of these issues are put together, it is clear why the market is in bear territory but there could be light at the end of the tunnel. Unfortunately, Cramer thinks many more stocks will need to be eaten by the bear before the market gets there.
"I can't be as bearish as I was up higher, but I can't be that bullish until some of these seven pillars of weakness get shored up," Cramer said. (Tweet this)
They will clear up — it just won't happen overnight, although Wednesday brought a nice glimpse of what things will look like when the bear market is over.