RealMoney Radio Recap: Cyclical Fear

As money goes into defensive stocks, the waste bin is filling up with some pretty good cyclicals, Jim Cramer said on his "RealMoney" radio show Wednesday.

For example, on Tuesday, when Canadian distributor Finning came out and said how well business is going for parent company Caterpillar (CAT Quote), nobody cared, and Caterpillar went down, he said.

Similarly, Ingersoll-Rand (IR Quote), a stock Cramer owns for his charitable trust, Action Alerts PLUS, announced less than 10 days ago that it was going to buy back stock and raise its dividend. Consequently, the stock went up $1, and then stopped because, again, nobody cares, Cramer said.

Even United Technologies (UTX Quote), which has little exposure to the U.S., has gone down, he said. United Technologies is another company which Cramer owns for his charitable trust.

The lesson here is that if you are looking at the game short term, then defensive stocks, such as Kellogg (K Quote) and General Mills (GIS Quote), are the place to look, Cramer said.

These are the stocks that work right after a tightening.

"You've got to sell companies that have exposure to the economy, and you have to go into cereals, soaps and soups," he said. "Don't fight this trend for the next three months."

Six months from now, cyclicals will do better than the defensive stocks, he added.