With such volatile swings to kick off the first week of 2016, Jim Cramer is ready to switch from capital preservation mode to capital appreciation mode — something that needs to happen before a sustained rally can begin.
"I've put together an extensive checklist of the things that need to happen before we can be more concerned about making money than we are with not losing money," the "Mad Money" host said.
Cramer named 14 events that need to occur for the market to find a bottom and for stocks to stop endlessly losing money:
No. 1 Federal Reserve must change the debilitating narrative that it adopted after the first rate hike. While Cramer understands that the stock market is not the Fed's main concern, the Fed needs to know its own strength and recognize that when it speaks about the need for four more rate hikes in 2016, it creates tremendous uncertainty. Cramer wants the Fed to be more data dependent, not just on employment, but other factors such as deflation and slowdown in various areas of the economy.
No. 2 Political uncertainty must resolve itself. Right now, Cramer sees both the Democratic and Republican parties as being anti-capital appreciation and pro-capital preservation. He worries that both parties are poised to make the situation on Wall Street uglier than any bull would want it to be.