Play Defense While We Wait on Fed

Lots of talk about the worst-of-both-worlds situation developing: The Fed thinks the economy is gaining strength, while the people in the trenches know that it is losing strength.

That's a dreadful combination, akin to the 2000-2001 scenario where the Fed just kept lifting rates even though it became clear that the dot-com economy had crashed in April 2000. That's killing the cancer and then adding an additional, punitive dose of chemo to be sure the patient doesn't make it.

I know that when oil can't even bounce -- despite the heights from which it has come -- and copper collapses virtually overnight, the signals are all there that the medicine is working.

But even the measured notes that came out from the FOMC make it clear that the Fed is more concerned about price acceleration than it is about possible weakening.

Given that there are whole funds out there like the CGM fund that is up huge -- CGM Capital, totally based on stuff like Brazilian airlines and worldwide steel companies -- you know that we are headed for something nasty, and that Wednesday's selloff wasn't it.

I found it heartening that some people are thinking we could crash. I got my first caller of that type on "Mad Money" last night. We need more fear.

But the fear needs to be completely unfounded, and there is no way it can be unfounded if the Fed doesn't see what you and I see.

Just how weak are things? I think this Harley-Davidson (HDI - commentary - Cramer's Take) forecast -- accurately predicted by Doug Kass on our sister site -- is indicative of how bad things can get. A 5% to 15% cut in growth is a thrown-through-the-windshield type of thing that should make the Fed shut up and smell the slowdown.

Until they do, though, I think we are going to see more weakness in things cyclical and tech, more ASMLs (ASML - commentary - Cramer's Take) and Harleys, and far fewer Black & Deckers (BDK - commentary - Cramer's Take).

So, find your defensives, stake them out, build them up on weakness, keep a finger or two in oil, and just wait until the Fed knows what we know. Hope that the defense scores on a pick, but, as usual, just try to keep the losses to a minimum until the game gets more winnable later in the year.

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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS by clicking here. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict."