All rallies might look the same, but sell-offs are all different in their own way. Jim Cramer applied this logic to the plunging of the averages on Monday, even as the proximate cause of the worldwide sell-off was China.
Often when a rally occurs, traders will figure out what stocks have not moved in sync with the S&P, and buy those stocks.
"Why not? A rally should include almost everything because rallies reflect generally positive events that resonate with all stocks. That is totally not the case with sell-offs, which is why we need to plunge into them on a case-by-case basis," the "Mad Money" host said.
Stocks declined significantly in the market open on Monday after Chinese rules involving circuit breakers halted trading after stocks declined 7 percent. As a result, Europe sank 3 percent and the U.S. market dropped 2 percent.
Cramer speculated that the impact of China could cause the U.S. market to decline as much as 5 to 7 percent, so it may be best for investors to sit on their hands until the market gets to that level.
"Sell-offs can be vicious, and we don't need to be heroes, especially when the Fed is tightening. We must always be willing to take a pass, even as our ultimate goal is to buy stocks of good companies at reasonable prices," Cramer said. (Tweet This)