Jim Cramer's Stop Trading! Avoid the Brokers

Avoid the brokers till Friday, after the first round of earnings is out, Jim Cramer said Tuesday on CNBC's "Stop Trading!" segment.

Cramer said the subprime lending meltdown shows why it's important to sit out trades in Goldman (GS Quote), Lehman (LEH Quote) and Bear Stearns (BSC Quote) till after they've all reported first-quarter earnings this week. Goldman was off modestly despite a strong quarter, and the other two were down more than 5% amid worries that they'll be hit by bad loans to homebuyers with poor credit histories.

Cramer noted that the only two Dow Jones Industrial Average components to be up Tuesday are 3M (MMM Quote), which he called a "stalwart" on down days because of its longstanding stock buyback, and AT&T (T Quote), which he called a "classic defensive play" with its 4% dividend yield.

Cramer said much of the action Tuesday, with the DJIA down 176, is attributable to options expiration. He said that options expiration week tends to bring "one very big down day," and this is it.

Cramer added that the action in Accredited (LEND Quote) reaffirms his thesis that all but a few of the publicly traded subprime lenders will be put out of their misery by an industrywide credit crunch. Cramer said Accredited is a better operation than New Century (NEW Quote) or NovaStar (NFI Quote), both of which he called "sloppy" in their lending standards. But Cramer said the whole subprime group, not to mention all the big brokers and banks, "are getting pulled down" in what he called the early part of "a deflationary spiral."