Mad Money

Cramer's sell-off strategy: Spotting the market's bottom

Key Points
  • "Mad Money" host Jim Cramer prepares investors for the stock market's intraday gyrations.
  • Cramer advises a caller on an intraday pattern he has noticed in the stock market.
Spotting the market's bottom

In his nearly 40 years of investing, CNBC's Jim Cramer has noticed one thing about broad-based stock market declines.

"The market bottoms in thirds," the "Mad Money" host told a caller in a sell-off strategy session on Monday. "It pretty much tells you what's going to happen."

Cramer predicted that the first two sectors to bottom would be the banks, dragged down by Wells Fargo after the Federal Reserve placed restrictions on its business, and health care, which has seen more pain than gain of late.

Only then will investors start to see some stability, but that does not mean they should jump at the chance to buy in, Cramer warned.

"Don't ever bite at the opening. If the opening's tomorrow weirdly up because of some problem we don't even know … don't bite. Let it come in," the "Mad Money" host said.

Based on a pattern he has noticed in the stock market's intraday moves, Cramer encouraged investors to keep their eyes on the clock.

"The market tends to bottom intraday between 11:00 and 2:30, but if it doesn't rally, then there's a lot of forced selling that comes from margin clerks," Cramer said. "So quarter to 3:00 is make or break. So if you want to buy a little, don't buy [at] the opening. Wait until 11:00 when Europe is closing. Be sure not to buy all of it, because at 2:30, we'll find out whether it's going to hold. If it doesn't, we're going to have to wait until the next day to buy a little more."

All things considered, Cramer determined that if he were an investor, he wouldn't run away with the weak hands.

"I am not going to flee this market," he said. "I'm going to look at individual stocks that aren't impacted and maybe do some buying."

WATCH: Cramer takes caller questions during sell-off

Cramer's sell-off strategy: Spotting the market's bottom

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