Market ‘beat down’ not over yet, Cramer says

Stocks tumbled on Tuesday in a "beat down" that was deserved, Jim Cramer said, and it's not over yet.

The number one problem is Syria and the uncertainty over what is going to happen there, the "Mad Money" host noted.

"Whenever we don't know what's going to happen in the Middle East, we get a real selloff because you have to assume the worst," Cramer said.

The other issue is Washington–namely, the upcoming fight over the debt ceiling, which is not priced into the market yet.

On Tuesday, Treasury Secretary Jack Lew told CNBC that President Barack Obama would not negotiate with Congress over raising the debt limit. This followed the White House's warning on Monday that the U.S. could run out of money to pay its bills around mid-October.

Adam Jeffery | CNBC

"That, of course, means not only will there be negotiations, but the negotiations will be protracted, they'll be negative, they'll be acrimonious and they will be terrible for the stock market," Cramer said.

On top of that, the Federal Reserve has started hinting that it will begin to wind down its stimulus program in September, and the president will name the next Fed chairman around the same time.

While these negative aren't priced into the market yet, these issues could also slow the U.S. economy, he said. If that happens, interest rates go down–an "unmitigated positive."

So what should you adjust?

"I think we need to expect that the market can drop two to three percent more between now and when the missiles hit Damascus," Cramer said.

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At that point, he suggests going back to stocks that do well in a slowing economy like biotechs and big pharmaceutical companies. Also, if you believe the war could be worse than Cramer expects, you could buy some big international or domestic oil names. One sector he doesn't like, however, is banks.

"You have to be ready to buy the Bristol-Myers' of the world when the smoke clears, but you better raise some cash so you can handle the exposure, especially because Washington's lurking, and as terrible as Syria could be for our stock market, the specter of the Republicans and the Democrats going at it is simply more than this market can handle," Cramer said.

Call Cramer: 1-800-743-CNBC

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