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TheStreet.com TV Recap: Hold Your Fire

TheStreet.com Staff

Although the market's seeing some selling, Cramer told Aaron Task, the host of Wall St. Confidential, not to succumb to the "trigger-happy" mentality of mutual funds and hedge funds; instead, he believes investors should use the market declines to get into stocks at their own prices.

But overall, Cramer said this was a good week to "step away," see how the companies are doing and then take action.

"People who are in the market this week and the other three weeks of the year that are pure earnings season are so easily whipsawed that it makes no sense to put money to work," Cramer said. "This week you must sit on your hands if you're going to outperform."

He said Microsoft (MSFT Quote) has become a core position, "where the future is brighter than the past." Also, CEO Steven Ballmer has become an executive who promises to deliver -- and then does so, Cramer said.

Cramer said he still believes Caterpillar (CAT Quote) is the key to the market.

The most interesting thing about Caterpillar is that it has gotten a "tremendous amount of credibility" by guiding down big, reporting a bad number and giving "superb" guidance, Cramer said. "Its bullishness is being rewarded with a nice bump up here."

He believes that people will take advantage of what he called "an interesting opportunity" to buy Caterpillar at a very low multiple in 2007.

Further, he said he heard nothing on the Caterpillar call that was positive about housing.

"Housing and lenders in the subprime category will bottom only with the help of the Fed," Cramer said. "The idea that the glut will work itself off without government help is a misstatement of what will happen." He said his bullish thesis of a rate cut is predicated on the verdict that we will not see a bottom until we get government aid.

"The people who are propounding the thesis that the Fed can stay the same or raise rates are flying in the face of all history and I'm uncomfortable with doing that," Cramer said.

However, he does not believe it will happen until May because that will give enough time for Ben Bernanke to have been Fed chairman and for the Fed to see a year-over-year downturn in commodity prices.