CNBC's Jim Cramer suggests investors should hold on buying Thursday's market dip because there are a number of causes for concern.
"Whatever you do, I don't want you to try to be a hero here. After today's shellacking ... you might be tempted to just start buying stocks in the weakness," the "Mad Money" host said. "But given the market's massive run-up — in a pretty short period of time, mind you — I think it's a little too soon to put new money to work. We were due for a sell off and I doubt it will be finished after just one day."
Why should Wall Street worry when the earnings season has been strong and the markets are up this year? Because American and Chinese officials are far from finalizing a trade deal, companies have been offering weak guidance, and economic slowdown in Europe is weighing on sentiment, Cramer explained.
Major U.S. indexes all shed more or less 1 percent in Thursday's session.
"I don't want you to get too bearish and I like the way the market came back from its lows, but we actually did some selling at the open today for my charitable trust … [because] the averages are still way, way above the levels where we wanted to do some buying originally," Cramer said. "So there's no reason to break discipline here."
While the Dow Jones Industrial Average is up more than 7 percent this year, Cramer said the market has been bolstered by hopes that the U.S. and China could seal a trade agreement before a 90-day tariff truce ends and the Federal Reserve would pull back on interest rate hikes this year.
"Now one of those wishes came true. The Fed stopped tightening, at least for the moment and became more grounded in reality," Cramer said. "But if this move was going to continue higher, we needed the other wish to come true, too. A trade deal before the tariffs on Chinese imports automatically go higher on March 1."
The Dow fell as much as 300 points at one point Thursday after CNBC reported that President Donald Trump is unlikely to meet with his counterpart Xi Jinping to close on a deal. That could send markets lower because "the stock markets very much wants a deal," Cramer said.
U.S. trade officials want China to stop taking technology that could be used to rival America as a "hegemonic superpower," while Chinese officials may be prolonging the standoff because of divided government in Washington, he explained.
"Normally you would be able to buy the stocks that came down hard on a day like today, but we know that these groups — technology, aerospace, industrials — all have the most to lose from no trade deal," he said. "Sure, their earnings tended to be very strong, but the future looms darker than the past if we can't work something out with China pretty quickly."
In general, the earnings season has been strong including good quarterly results from Facebook, Snap, Starbucks, and Capri Holdings, Cramer said. But guidance has been weak including companies such as Twitter, Tapestry, and FireEye among others, which is another reason why traders sold on Thursday, he said.
Cramer suggested investors could wait three days, then buy shares of Twitter.
As cybesecurity stocks have been "red-hot," FireEye "shocked investors and me with its weaker outlook," he continued. The stock finished down 12 percent Thursday.
In addition to U.S.-China relations and weak guidance, weakness in Europe is draining crude business, he said, explaining that Eurozone forecasts have caused oil to tumble and the trade issues have exacerbated the issue.
"When oil dropped more than a dollar in the morning, you know the bulls were in for a beatdown," Cramer said. "Given that oil is at the top of the range, we might get another bushwhack tomorrow if oil gets closer to $50 tomorrow."
The "Mad Money" host acknowledged that the merger between Suntrust and BB&T, as well as earnings from Chipotle and Masco, were positives, but not enough to satisfy traders.
"We have to own that it was a bad day for the bulls, and it's pretty realistic to expect ... a couple more sessions like this one until the facts get more positive," Cramer said. "So until we either get lower prices or a brighter outlook, I think you should hold off putting any new money to work until we get to safer levels."
WATCH: Cramer explains why investors should take caution in buying stocks on Thursday's sell-off
Disclosure: Cramer's charitable trust owns shares of Facebook.
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