Finally, the market became so oversold on Wednesday that Jim Cramer thinks investors can start to pick their favorite stocks again. And while the market didn't bottom, there were real signs of capitulation.
"I am not saying that a bottom has arrived … but I am saying that for the first time since this hideous decline began, we are beginning to see some of the necessary ingredients that make a bottom possible," the "Mad Money" host said.
There is very little that Cramer likes about this market. But one of his cardinal rules is that discipline always trumps conviction. Right now his discipline tells him that investors can start to build small positions in high-yielding dividend stocks that have come down, or companies that were punished, even though they reported solid numbers.
Cramer made this recommendation because he sees that the market is finally starting to take down its former leaders — like FANG and biotechs. Stocks could go lower from here, so that is why he thinks it is time to start with the safe stocks.
The case of General Motors on Wednesday was a sobering reminder to Cramer of just how fragile the market really is and how difficult it can be to speculate on any stock.
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GM had the perfect trifecta when it raised earnings estimates substantially, boosted its dividend and augmented its buyback to add another $4 billion to its already $5 billion commitment.
Investors barely even flinched at this news, and the stock closed up just 16 cents a share on Wednesday.
So if the stocks with the best news flow can't even manage to rally, and the ones with the worst news fall further, that means Cramer is still respecting the bear.
"We also have to be disciplined, and because we are seeing the first signs of capitulation, which means a bottom might be closer than you think, but not so close that we won't take a lot more pain first," Cramer said.
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