Mad Money

Jim Cramer reveals his playbook, says investors can start slowly buying stocks Thursday afternoon

Key Points
  • "These kinds of sell-offs usually last about three days. This one started yesterday. I'm betting things begin to improve tomorrow around 2:30 p.m.," CNBC's Jim Cramer said.
  • "That's when the best rallies tend to begin [and] it's going to start with the food" and drug stocks, the "Mad Money" host said.
  • "If it doesn't start by 2:30 p.m., wait until Friday. ... Then you can slowly start buying your favorite stocks in the Cramer Covid index because they're the kind of names you can still confidently pick up into weakness here," he said.
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Jim Cramer explains why bank stocks can't be bought amid virus crisis

CNBC's Jim Cramer said Wednesday that investors can find buying opportunities in the market after Wall Street recorded multiple days of losses.

The Dow Jones Industrial Average plunged more than 516 points, or 2.17%, to 23,247.97 for its third-straight negative trading session. The S&P 500 and Nasdaq Composite traded 1.7% and 1.55% lower, respectively, for their second-straight negative session.

The downside was fueled by concerns of an overbought market and exacerbated by a gloomy message from Federal Reserve Chairman Jerome Powell that the economy will need more propping.

"These kinds of sell-offs usually last about three days. This one started yesterday. I'm betting things begin to improve tomorrow around 2:30 p.m.," the "Mad Money" host said. "That's when the best rallies tend to begin [and] it's going to start with the food" and drug stocks.

"If it doesn't start by 2:30 p.m., wait until Friday," he added. "Then you can slowly start buying your favorite stocks in the Cramer Covid index because they're the kind of names you can still confidently pick up into weakness here."

As the broader market sold off, the Cramer Covid-19 Broad Index dipped about 0.5% during the session.

The blue-chip index has fallen 4.51% and the benchmark index has dropped 3.75% week to date. The Cramer Covid basket of stocks is up about 0.3% the last three days.

"You want stocks that can thrive in a world that looks a lot like today because that's the world we live in," said Cramer, a former hedge-fund manager. "That's why I created the Cramer Covid-19 Index, but these stocks have been roaring in recent weeks. They all got slammed today."

Cramer is not the only one who thinks that the market has run a little too high for his liking. The billionaire hedge-fund investor David Tepper on CNBC's "Halftime Report" earlier that day said the market was "maybe the second-most overvalued stock market I've ever seen," behind only the market conditions of 1999. That's when internet equities were deluged by venture capital investments, which led to the infamous dot-com bubble of the early 2000s.

As the coronavirus pandemic continues to disturb the U.S. economy and markets, Cramer has been hammering home that investors should opt for individual stock picking over index investing in the current environment. He laid out stocks that he thinks can perform well both during and post-pandemic.

The Cramer Covid-19 Index spans more than a dozen industries.

In Wednesday's episode, Cramer told viewers to stay away from a handful of industries that remain too risky, despite state efforts to reopen their economies after a monthslong lockdown to fend off the spread of the virus.

Those industries include early-stage biotechs, banks, airlines, oil companies and real estate investment trusts.

"You know what would save all of these troubled stocks? Bingo. A vaccine," Cramer said. "Yet, the prospect of a vaccine seems more remote by the day."

VIDEO12:3012:30
Jim Cramer reveals his playbook to buy stocks in recent market weakness

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