Investors are starting to realize that massive strength in tech and retail stocks has been concealing weakness in the broader market, CNBC's Jim Cramer said Friday.
"This is a horrendous decline that we just haven't talked about because it's been masked by FAANG and by the retailers and by a couple [small-cap] domestic stocks," Cramer said on "Squawk Box."
Stocks, particularly industrials, have been weak "since the peak in January" but nobody was really taking notice, he added.
Cramer spoke after the Dow Jones Industrial Average posted its eighth straight negative session Thursday. The Dow was upmore than 100 points early Friday, but a down day would give the index its first nine-day skid in more than 40 years.
Stocks sold off in early February after a higher-than-expected wage number in January's jobs report sparked fears of inflation and rising interest rates. Wall Street eventually bottomed out on Feb. 8, briefly plunging into 10 percent correction territory.
Cramer expects the better value is in industrials, even though he said the sector will likely report negative quarterly numbers.
"I like the group," and investors should buy it on "weakness," Cramer said later on "Squawk on the Street."
The "Mad Money" host mentioned on Monday that he was worried that so few stocks had been driving the market's last advance. He blamed negative headlines surrounding President Donald Trump's tariffs and the retaliatory measures from countries targeted.
This week, Trump instructed the U.S. trade representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. That would be on top of the 25 percent tariff on up to $50 billion of Chinese products that the president unveiled last week. Those latter measures, announced on June 15, are set to start July 6.
The Trump administrationalso put tariffs of 25 percent on steel imports and 10 percent on aluminum imports from Canada, Mexico, and the European Union earlier this month.
The White House "believes it's going to beat China," Cramer said Friday, adding that there are many "false reports" that the administration will "let up" on its trade tactics.
Cramer expects the U.S. will "win" a trade war with China. But he stressed it would need to be finished in the next three to six months because "the world [economy] is slowing too quickly."