NEW YORK (Real Money) -- Crises battle plans are all about what the other guy is going to do, not you. So, for Monday, we have to figure that there will be two types of money taking action: those trying to profit from the end of Greece and those caught on the wrong side of it.
Neither should be met with your buying, because it would be foolish to help out either cohort. The first, the profiteering hedge funds, want to get a short off as low as down 1%, hoping that S&P will fall 2% minimum, so they can make a decent return.
The second, those on the wrong side of Greece -- whatever that side turns out to be -- is trying to save its year or itself entirely and probably has more to unload than you think. These are so-called dangerous sellers, who will cause people in the media to evoke Lehman because that's what you do if you are in the media. You always try to use the worst benchmark.
That's the pattern no matter what the calamity is and you MUST let it play out.
Now, how about the actual issues? We would have an easy time of things if so many people hadn't decided that the Greeks were negotiating in good faith -- they never were -- or that the Germans had an intention of massive forgiveness (there was never a chance for that). The media covered these talks so poorly that they led you to believe that these were reasonable counterparts. So there was far more complacency than would normally be the case.
Who owns the debt? Whoever has it in quantity will be downgraded and that means their bonds and stocks will take hits. The EU is prepared to buy the bonds. The stocks will be gauged by yield. This process takes two-to-three days, which will make it difficult to rally, especially because of the high percentage of moron hedge funds who borrowed money and got it wrong (the knuckleheads). If the euro isn't down much, that means a Lehman-like event will be avoided and the euro will rebound faster than people think.
The dollar will most likely rally, perhaps challenging the highs from earlier this year. This is just plain bad for the international companies based here and their numbers should be cut ahead of when they report, but they won't be, creating disappointment when outlooks are given.
Our interest rates should go down on some sort of flight-to-quality trade, which will roll back the financial rally. These stocks have all run; they are vulnerable.
On day two, biotech and non-European high-growth bottom after futures pressure breaks everything again. These are the least sensitive stocks and MUST be bought. Nothing else really works.
On day three, it's consumer packaged goods with good yields if the dollar has stopped going higher. It's high-yielding REITs and some higher-yielding MLPs that might work in the morning and then in the afternoon it's classic American growth stocks.
Day four tends to be higher-growth tech and not much else.
Day five and we should we back to normal and people can buy pretty much anything.
Now we have an employment number this week that will be strong enough that several Fed heads will give interviews signaling that September is too long to wait. These calls are all about softening the beach for the rate hike in September. Each will cause the market to get hit.
So there's the setup. It's suboptimal. Take your time.
Let the sellers come to you.
At the time of publication, Jim Cramer's charitable trust Action Alerts PLUS held no positions in stocks mentioned.