Jim Cramer could only explain the decline of the averages on Friday as a repercussion of being in the heart of liquidation season.
Liquidation season occurs when clients of poorly performing hedge funds ask for their money back. It tends to occur at the end of a quarter or year. In response, hedge funds must sell stocks in the open market to raise the money that needs to be returned to investors.
That means if a hedge fund performed poorly this year; it is probably flooded with liquidation requests right now. In fact, there have been more failed hedge funds this year than any time since 2008.
"Just be careful when you try to bottom fish, knowing that the bottom could always be a false bottom, a trapdoor, so to speak, that makes you overconfident versus the miserable moment we seem to be in," Cramer said.
With this in mind, Cramer shared the events and stocks he will be watching next week:
Monday: "Star Wars"
This could be a great opportunity to get into Disney for the long term. The stock was downgraded by an analyst with a recommendation to sell at a $90 price target. However, Cramer thinks "Star Wars" is worth a lot to the company and could translate into sequels, merchandise and theme park business.