The Market Is at a Tipping Point - Here's What to Do

NEW YORK (TheStreet) -- Friends, earthlings and fellow investors, lend me your ears. The official and unofficial sirens of the stock market community are sounding the alarm, and once again it sounds daunting.

In essence, they are saying: "Brace yourself and get ready for some dramatic moves in the major stock market indices."

Thursday's ugly sell-off coupled with a dramatic move higher in the prices of gold and silver may be among the early-warning indicators.

Some of the major gold producers I watch, like Barrick Gold (ABX) and Goldcorp (GG) (GG) each moved up over 6% on heavy volume.

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Even some of the small precious metals explorers-producers like Gold Resource (GORO) and Keegan Resources (KGN) skyrocketed 8.5% and almost 12% respectively in a single session.

Funny, though, in spite of Moody's downgrade of Spanish Banks and lots of frightening talk about the Europe's ongoing fiscal fiasco, the euro hardly budged.

The CurrencyShares Euro Trust ETF (FXE) closed virtually unchanged. Spain's El Mundo newspaper reported a near panic by customers at Spain's Bankia. The story claimed nervous depositors had withdrawn more than 1 billion euros ($1.27 billion) over the past week, a report that the Spanish government denied.

One would have expected to see Madrid-based Banco Santander (STD) under great pressure. Yet although it hit a 52-week low of $5.52 it managed to close at $5.56, down less than 2%.

The news on this side of "The Pond" wasn't all that encouraging either. The Philadelphia Federal Reserve's index of business conditions was released, and wouldn't you know it hit its lowest level since September 2011. If that weren't enough, the weekly claims for jobless benefits showed no improvement, a sign that the pace of hiring remains comatose.

Yet there was some good news. One of the more important companies of the Dow Jones Industrial Average , scandal-ridden Wal-Mart (WMT) offered a positive surprise.

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The Bentonville, Arkansas, based company posted better-than-expected first-quarter results, earning $3.74 billion, or $1.09 per share, in the quarter ended April 30. That compares with $3.39 billion, or 97 cents per share, in the year-ago period. The latest results beat the $1.04 per share analysts were expecting.

Then I watched the opening segment of Jim Cramer's "Mad Money" show. He sounded uneasy and warned that we may see an even uglier sell-off in the market after the Facebook (FB) IPO and options expiration Friday.

But here's the conundrum. After warning of a possible 1,000 point drop in the Dow, Cramer alluded to the idea that some unexpected good news could suddenly cause the Dow to soar "1,000 points".

If that happened, we may see the S&P 500 leap nearly 8% to a much higher level of around 1,410.

That's why it's a tipping point, or what Cramer called a "fulcrum moment." In other words, the major averages could go either way, and, whichever way they go it will probably be dramatic.

So what's a level-headed trader or investor to do now? First, prune your portfolio of stocks that don't have outstanding earnings, growing revenues and lots of cash.

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