Anatomy of a Decline

The stages of a decline are in place. First everything goes down. We are wrapping up that phase. Then the losers in the no-jobs setup keep going down, but the strong secular growth stories - smartphones - stabilize, as well as the weak-dollar soft goods that get bought no matter what, as Wal-Mart (WMT - commentary - Trade Now) tells us in the excellent interview in the Journal this morning.

Meanwhile, the other stocks keep going down. This is Procter & Gamble (PG - commentary - Trade Now)/Pepsi (PEP - commentary - Trade Now)/Kimberly-Clark (KMB - commentary - Trade Now) time, as well as the true high-yielders, from Kinder Morgan Energy Partners (KMP - commentary - Trade Now) to Altria (MO - commentary - Trade Now).

Then the accidental high-yielders bottom. Other stuff -- think Lennar (LEN - commentary - Trade Now) and marginal banks, think PNC (PNC - commentary - Trade Now), keep going down, as well as Citigroup (C - commentary - Trade Now) and Bank of America (BAC - commentary - Trade Now) and Wells Fargo (WFC - commentary - Trade Now) -- as well as anything discretionary. I agree with Doug, for example, that BAC is a good buy a point or two down, as it is a tad high right now. Citigroup is right at $4.25.

Then those stocks get too cheap, and finally Congress wakes up to jobs -- but that might not happen until we are demonstrably lower -- the 5%-7% decline scenario I outlined on my show last night and in my writings here..

We are already well along the curve of the first cohort, which is why we are having some stability, and the softies and secular growers are already OK to start on.

For the rest, wait for the whites of their eyes.

At the time of publication, Cramer was long BAC, MO, PG and WFC.

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