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Cramer's 'Mad Money' Recap: All Is Not Lost

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NEW YORK ( TheStreet) -- The U.S. economy was almost there, almost ready to spring higher, Jim Cramer told his "Mad Money" TV show viewers Thursday. But then Washington got involved, and all was lost. We're now facing the first congressionally mandated bear market we've ever seen, said Cramer, all because 536 people couldn't agree.

Cramer said it's downright infuriating, just when the housing market was beginning to recover, just when autos were getting stronger, when retail sales were growing and when the banks looked like they were finally finding their footing, Congress has been able to undo it all and send our markets sharply lower. For the year, U.S. stocks are now up just half of their counterparts in Europe, and Europe is in a recession.

So how can investors measure the damage and begin to ascertain when things might be getting better? Cramer came up with three indicators to help. First was the "Washington on TV" indicator. He said anytime the president or member of Congress gets on the air, expect the markets to go lower.

Cramer's second indicator was Lockheed Martin (LMT) , the defense contractor with a 5% dividend yield. If the U.S. falls over the fiscal cliff, Lockheed will get hurt by both defense spending cuts and a rise in dividend taxes, Cramer noted, making this stock uniquely positioned to feel the blow.

Finally, Cramer said investors can use Cisco (CSCO) , Home Depot (HD) and Petsmart (PETM) as gauges for Washington's damage. Cramer said all three of these companies posted stellar earnings, so if they can't hold onto their gains, no one can.

All of these indicators should help investors figure out whether the effects of the fiscal cliff are baked into the markets and whether its time to begin buying back in.

Sell Block

In the Thursday "Sell Block" segment, Cramer reminded viewers some stocks go down because they deserve to, and that's certainly the case with J.C. Penney (JCP) .

Cramer said investors may be tempted by shares of J.C. Penney, which have fallen 61% from their highs, but the company remains a value trap and is showing no signs of improving. Penney has had three disappointing quarters in a row, Cramer noted, and sales still continue to decline, dramatically so, and the company's balance sheet is weakening.

Penney remains in a tailspin, Cramer said, and is offering no clarity on where it plans to go. Initially, CEO Ron Johnson laid out a plan with no coupons, but after customers revolted a few were added back in, then more followed. While it's true that Penney is remodeling its stores, the company may go broke doing so.