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How should investors dip their toes into a volatile market? That was the question Jim Cramer pondered with his Mad Money viewers Tuesday. Cramer reminded viewers to never chase a big up opening such as what we we saw Tuesday. Wait for weakness, then pounce on stocks that offer dividend protection.
We're in capital preservation mode now that the Federal Reserve is raising interest rates, and that means looking for stocks that offer some yield protection during the big market declines.
Investors need to avoid big yielders in the oil patch, however, as those companies may need to issue more equity to survive. Likewise with companies like Caterpillar (CAT) , that need a strong China, or Seagate (STX) , which needs strong PC sales in order to thrive.
What should investors be looking for? Cramer suggested AT&T (T) and Verizon (VZ) , which may not offer a lot of growth but are well-run entities. He also gave the nod to General Motors (GM) , which just boosted its dividend and increased its stock buyback.
Then there are stocks such as Tupperware (TUP) , which is thriving in the ailing emerging markets, and real estate investment trusts including Ventas (VTR) and EPR Properties (EPR) , both with yields over 5%.
Lastly, Cramer recommended Cedar Fair (FUN) with its 6.4% yield.
Off the Charts
In the "Off the Charts" segment, Cramer went head to head with colleague Carolyn Boroden over the direction of the markets after last week's nasty selloff.
Boroden correctly predicted the market's top last year by noting the bull run between May 2000 and October 2007 lasted 91 months. The bull run between October 2007 and the market's most recent top in May 2015 was also 91 months.
But now Boroden noted the markets have been making a series of lower lows and lower highs, while falling below most of the key moving averages. Her next test for the markets will be the S&P 500 between 1,847 and 1,857, which is its floor of support, and also between 1,832 and 1,838.
If the S&P is able to hold those levels, Boroden felt a tradable bounce is likely. But, she cautioned, falling below those levels could trigger a massive selloff like those seen in the 2000 dot-com collapse and the 2007 financial panic. Based on those patterns, Boroden felt the selling might not stop until the market falls another 28%, down to 1,350 on the S&P.