Four things need to occur for the stock market to break out of its downtrend, CNBC's Jim Cramer said as stocks plunged in Monday's trading session on worries about an expected interest rate hike from the Federal Reserve.
"Now that pretty much everything's in bear market territory, maybe in a bear market, what's the formula for getting out of it?" he said on "Mad Money," adding that "this is the most treacherous market" he's witnessed "since the financial crisis."
The recovery has to start with the Fed, Cramer said. He reiterated that its chairman, Jerome Powell, should end the central bank's pivotal meeting this week with a declaration that the Fed will be more data-dependent as it considers future rate hikes.
The second leg of the market's potential recovery could come from improved market sentiment, the longtime investor argued. He said the staggering declines in shares of Johnson & Johnson after a Reuters report claiming that the company knew of asbestos in its baby powder product, while warranted, may have been an overreaction.
Johnson & Johnson has lost roughly $50 billion in market value since the Reuters story broke on Friday.
"This is genuine bear market behavior," said Cramer, whose charitable trust owns shares of the pharmaceutical company. "It needs to stop going down before we can get a sustained rebound in the averages."
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