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Cramer's 'Mad Money' Recap: DEFCON 2 Is Here (Final)

Search Jim Cramer's Mad Money trading recommendations using our exclusive Mad Money Stock Screener and watch Jim Cramer's Mad Money Post Game video exclusively on TheStreet.com.


NEW YORK ( TheStreet) -- "We have at last arrived at DEFCON 2," Jim Cramer warned his "Mad Money" TV show viewers Tuesday.

Cramer said that the Currency Shares Euro Trust (FXE), a key measure of the strength of the euro vs. the dollar, took out the critical $130 level that he warned about Monday, ushering in the possibility of a severe recession.

Cramer said that he sometimes struggles to put this market into context, but noted that with the euro continuing to weaken, the possibility of a nationalization of a major European bank is back on the table, as is the possibility, and probability, of big downgrades on the debt of one or more soverign nations. That, in turn, will lead to the likelihood of a severe recession, said Cramer, lowering growth worldwide.

"Our markets will fall in that scenario," said Cramer, and that scenario is becoming increasingly more likely.

Cramer reiterated his call for investors to raise cash and trim their positions in all stocks except those with high dividend yields. He said the master limited partnerships he's recommended still work, as do the REITs and the food stocks with big yields.

Cramer said that investors can take a chance on U.S. retailers like Ross Stores (ROST) or Dollar General (DG) as well.

Cramer also gave the nod to restaurant names with strong growth, names like Domino's Pizza (DPZ) and Yum Brands (YUM), as well as the high-growth domestic oil and natural gas stocks

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