Cramer: Recipe for Ringing the Register

Editor's Note: This article was originally published at 6:56 a.m. EDT on Real Money on May 23. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- When you see almost any market down 7%, it's pretty shocking -- except, perhaps, in the case of Japan. For the Japanese market, which has been walked higher for months, a 7% decline may not be all that much. This was a market that had been up about 50% year to date, so you are talking about a correction that still takes it down only to a 39% gain for 2013. An artificial market with a real correction should not play havoc with the rest of the world. But when it's in conjunction with still one more disappointing -- not horrendous, but disappointing -- manufacturing number from China, the heated U.S. market can't shake it off.

It's funny -- if the Federal Reserve minutes hadn't been so questioning of Ben Bernanke's bond-buying program, we might actually have had a situation that could have been shrugged off with a 4% correction -- 1.5% from top to bottom Wednesday and then 2.5% if we are lockstep with Europe Thursday. Instead, though, that dreaded fear of Fed tapering is occurring as Europe remains in a recession and as China seems to be headed into a relatively severe slowdown. As a result, this may mean that a 5%-to-7% correction over several days makes more sense.

Hey, if Japan can have it in one day, we could have it in three.

Normally, I would be more sanguine and say, "OK, Japan and Europe and China have nothing to do with the housing and auto recovery in the U.S." But I am cognizant that there's a lot of hot and relatively unsophisticated money that has come in the U.S. market, lulled by the 19-straight-up-Tuesdays-no-real-correction phenomenon. That makes it more difficult to figure out whether it's worth selling down 2% or buying down 2% if the market is going to go down more anyway.

True dividend-yield support after this run is not near enough, as we saw from the horrendous selloffs in utilities and real estate investment trusts over the last few days.

When you layer on that we are about to embark on a three-day weekend -- when people who have ample profits are willing to sacrifice some of them to save the rest of them -- the situation isn't optimal.

My friend Herb Greenberg asked a very good question on Twitter this morning: Do I think the ample cash on the sidelines will now use this correction to come in and buy?

My thinking is "no." Here's why. If these same people didn't like it when the market was up 9% or 11% or 13% or 15%, why would they like it at any of those percentages on the way down? In fact, they will like it less, because the only thing that kept them from abandoning the market altogether was the possibility of falling too far behind the averages. That -- plus what I believe will be a wall of chattering fear, erected faster than the Russians built the Berlin Wall -- will make it very difficult for sidelined money to get on the playing field.

All in all, it's a recipe for ringing the register in a moment of stabilization as people wait for still lower prices before they make any move to get in. Don't forget the zeal of the chartists, who have now become your enemy if you are long. They have never seen so many stocks trading above their 50- and 200-day moving averages, and they will hound that point until the cows come home. They are a reinvigorated enemy of the bull case.

When you combine that with the unsophisticated speculators who have just entered the market, it can all cause real mayhem in the hottest stocks out there -- stocks that have taken their cue from the Fed, and not just the Fed-inspired fundamentals.

Action Alerts PLUS , which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

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