Haystack the dow tumbled another 1,033 points no, no, no. S p sank 3. 75 . Nasdaq nosediving 3. 9 . In all honesty, what does it take should we look the answer is no no at least for the moment. There are far too few winners and the circumstances behind their moves are so hard to predict its simply not worth the hunt, not right now. You have to be content with buying the stocks of the companies you like that have hit attractive levels even if you end up having to buy more lower later betting one day the madness ends with wildness its often a better idea and this is what my advice is to sit on your hands after late afternoons late reversal we know any move higher for the moment will prove to be effectual. I dont want you to sell everything look, im not trying to be a defeatist. Sometimes the truth hurts. First, let me do this. Let me clear up the real culprit behind todays shellacking i heard stocks are going down because of weakness in the bond market this is false. Bonds might have set off the decline last week but they barely budged today. Wrong suspect. I know plenty of people would love to play the selloff on washington we got used to that for awhile the government has to have massive bond sales to pay its bills. Thats in peoples heads and so is the prospect of a Government Shutdown its never caused a 10 decline in a matter of days. Washington is not guilty, at least not of this. There were no big earnings supports last night or this morning and most of the ones we got were not only positive but even strong earnings couldnt stop them from going lower the real culprit is the same miscreant thats weighed us down for the last couple of days, the unspooling of these obscure products that allow frankly i have to be plain spoken idiotic Money Managers and neophyte investors to bet against volatility or shorthand, vol. They always think theyre so cool last year this made you good money because the market was placid so the volatility index, you know we call it the vix seemed like a great short. Now weve got volatility in spades, though and its the last thing you want to bet against but people did and keep doing it the other day the collapse of just one of these instruments caused a horrendous decline in the pats crash where the dow lost a percent in the time it would take to grab a diet pepsi or to watch the eagles victory parade in the hero starved town of my birth, philadelphia, which i didnt get to watch. Its rooted in similar instruments. If you stick around ill give you the code, ill give you the names of the instruments and symbols so you can monitor how this trade is playing out and sense when the destruction is coming to an end right at home. Why do we care because in each case the losers most likely had to raise cash. The losers of this vix trade raised cash by selling stocks and stock futures to meet margin calls or handle requests by their investors who are dumbfounded for their money back thats the pressure. Thats the klatt rat damage that is hurting your stocks and crushing your nest egg the spillover is so great that its weighing down even the best of the best of stocks with the best numbers and the best prospects, hence why i said its a needle in a haystack to find winners at this moment heres the bad news, though, i counted 17 of these darn things, creations by various brokers and managers to let you make a leverage bet against the vix an now theyre all imploding. Now its not as though we havent seen this kind of thing before i swear some of these dopes never learn. The Current Situation is like a similar version of what happened in 2008. After hedge funds levered up, borrowed money to bet on Mortgage Backed bonds thinking they were getting a sleeping dog but it turned out what they really got was a gigantic mama bear and got behind her and the cubs back then i used to call it hedge funds gone wild. When you lose a fortune with borrowed money borrowed money you need to pay your broker back on that leads to forced selling in the stock market because how else are these guys going to raise that kind of money. Thats what youre seeing on your screen. The forced elling. The fact these bets are largely hidden from us and theyre like cockroaches, theres never just one, tells you were in for some more real pain. I wish it werent the case. Listen, man, it will clear up tomorrow but you know me, i cant do that ive been doing the show for 13 years. Have i ever done it . When will it be safe theres an answer, when enough of the managers who use this strategy strate strategyare beaten we want them wiped out the problem is we dont know when theyll be wiped out so were all being held hostage at the mercy of these clowns who seem to be creating their very own personal bear market the rest of us are trapped in. Lets just say you have to expect more crazy volatility until these morons break a lot of the people recently came into the market simply cant handle this kind of environment. There is no shame about that there is no shame. Its simplyhuman nature but their hasty exit is only compounding the panic were seeing what can protect a stock from hedge funds gone wild . The list is small. Lets go over what wont first big dividends wont help the market is going down all at once yield is very little and no protection evaluation, we often hear about that wait a second. Stocks can always get cheaper than they are today if there is another selloff from moron sellers. Not a defense, evaluation. Buybacks dont matter at all because they arent big enough to sop up all this forced selling going on plus companies arent allowed to repurchase stock after 3 45 p. M the government doesnt want them setting their own prices at the close. Hence did you ever see how bad it is from 3 45 to 4 00. No one is bidding like the companies and, of course, the sellers realize they have to put up money at the end of the day so what did work today what does it leave well, its now only ridiculously incredibly fabulous upside surprises. Ones that would take your breath away twitter stock exploded higher because it reported real profits, the stock of grubhub, seamless in new york jumped because it reported an amazing quarter and got itself a new investor 200 mill the games were exage rated because 20 of grub has been sold short because most people thought there was nothing special about a Restaurant Delivery system. Hey, theyre like messengers well, the shorts were wrong and propelled it into the stratosphere there is nvidia. I wanted to be lighthearted and talk about nvidia my dog but we are not lightheated when we talk about this nvidia was down hard all day because of this nonsense im describing but this stock managed to rally in the aftermarket because the quarter was that fantastic and ive had a good, hard look at it. It was great if we get a huge opening which is certainly likely because of what i described and nvidia, the stock goes lower, it might be worth buying but if its up big, you stay away it will most likely be pulled down dont chase a thing in this market thats a fools ear and. The bottom line, weve seen this movie in bear markets before when the market breaks down like this the culprit is forced selling. It always is, people its behind the scenes i worked in the Margin Department at goldman. I have seen what the clerks do this time its caused by the breakdown of these leveraged bets against volatility and it wont stop until the bets are unwound. We dont know when things will get placid again but until the traders get wiped out finding winning stocks will be like finding a needle in a haystack you want to identify High Quality Companies and use the weakness to scale into them gradually on the way down betting that the vix will end at some point and the key is you need to leave room to buy more at lower levels as were doing for my Charitable Trust because where this thing stops nobody knows. Although if you stick with me in this show ill give you the best clues i know at least to try to find out lets go to jeff in new jersey, please jeff caller hi, jim this is eff. Thank you for having me. Of course caller this is a twopart question ive been buying home depot stock for ten years since it was 20 a share thats smart. Caller thank you and im just wondering if i should continue buying and holding for my portfolio or not. Look, well view this market in two ways. If you need that money and you need that money in the next three months, look, i got to tell you maybe take some off the table. Home depot is a Great Company and none of whats happening in the stock market has anything to do with home depot my wife and i are planning the spring planting season you think im going to change my mind because some vix trader is knocking down the market it aint like that home depot is good i dont want you to do anything other than when it gets to 170 buy more unless you need that money now. Joe in new york, joe caller hey, jim, how are you, booyah. Booyah, man, whats going on caller my question is about wwe. So recently they reported their highest revenue for 2017 right. Caller with the recent changes in management, the announcement of the xfl, their wwe network and 25th anniversary of monday night raw, a milestone. That was a big hit, yeah. Caller yeah, i was there it was awesome nice. Caller what does it mean for their stock and is it the right time to buy . Look, there is no right time to buy right now and im fortunate enough to have a whole show devoted to what would be the right time heres how well look at wwe once again, while fans all over the globe are not going to stop or not going to stop watching, hold on to it. If it goes down 10 buy, buy, buy. And then wait and buy some more lower it could happen. Down and down she goes where she stops, well, i got some ideas in the mechanical madness ends, though, and the instruments calm down i want to you use the weakness to scale wide scales we call them into high quality stocks but no hurry the dow just dropped 1,000 points for the second time this week when will the selloff cease and whats really behind the decline . Ill try to give you some answers. The market has been all over the place, i know you got a lot of questions. Over to the phone lines to talk a special strategy session you know that panic never made anybody a dime after the 1,000point drop its clear were in a bitter adjustment period. Is that a euphemism . Yeah im revealing how we got here. Stick with cramer. Dont miss a second of mad money. Follow jimcramer on twitter have a question, tweet cramer madtweets send jim an email to madmoney cnbc. Com or give us a call at 1800743cnbc miss something head to madmoney. Cnbc. Com. So how will all this end craziness. When will we be able to enjoy the fruits where fabulous quarters like the we got from nvidia will be rewarded and with sharply higher prices. Or will we have to always have one eye on the exit door no matter how good the numbers are and for nvidias case they were spectacular. You have come to the right place because i am about to reveal the instruments making it so nvidia isnt up 30 tonight and so many of your stocks are already looking down big in tomorrows session. First understand i only know this stuff because i traded stocks for years and years and years and i have had to put pretty much the sum total of all my thinking caps on this one because it is real hard to find out and in many ways more difficult to explain but well try it here. First there are four instruments, i keep using the word instrument, things that trade. Four instruments that i am watching to figure out when this portion of this stock market nightmare is over. They are all a mouth full but you know what i owe you the whole truth and nothing but the truth. Even if you actually need a Rocket Scientist to figure it out. Lets start with the concept of the vix which weve talked about on tuesday this is a gauge calculated that measures volatility or how much up and down craziness there is in the market. Some call it the fear gauge. Weve called it that on the show for the longest time there hasnt been much craziness weve been pretty much in a straight line, kiss fence not a stairstep. Just up. That has meant there has been extremely low volatility record low volatility. Never seen this stuff before i call it a fantasy aisle. Its a trading addiction we used to joke when i was at Goldman Sachs that somebody would create an instrument that would allow you to trade and bet on braces on windows thats how bad the addiction is on wall street so it was a natural that brokers created securities that allow t you bet on whether theres going to be a lot of volatility or little not just up and down stocks, not just up and down bonds, not just up and down commodities but up and down the actual notion of vol. Theres a lot of fear and panic, you want to own volatility they call that own like its an asset. Think of it an as sed you want to buy or sell im not kidding. If there isnt a lot of volatility you want short volatility they will trade anything on wall street including fear. Now it isnt enough sometimes on wall street to just own volatility or bet against it brokers just know that people crave real juice particularly Hedge Fund Managers so they invented stocks to allow twice the gain of the vix or twice the loss if it goes down if you want to bet the downside on fear. These instruments are the proximate cause of the madness youre seeing. Yes. Consider them a Nuclear Blast zone and fallout is raining on the s p 500 that is threatening to take down the entire market even much further than it has if things are not, lets just say, calm the instruments i keep referring to are actually funds. Actual funds that track futures that trade on the direction of the vix in their own ridiculous way. Well, stripped of wall street why dont we just call them wager founds like when you go to the track. Some is like the daily double. Get a cigar out and smoke and lose some money. Except for its your money the first wager fund is called the pro shares ultra vix short term futures its an etf which seeks on a daily basis to provide investment result that is correspond to twice the performance of the s p 500 vix shortterm futures index the symbol this goes by, write it down, please. Uvxy now, if you look at the uvxy today you will notice one it started at 19 bucks and went to 28 yeah, about a 9 and change gain that means if you owned it this morning, you made 9 bucks. But how about if you were short it, you lost 9 bucks you may think so what . Something so obscure, how what is cramer smoking hes identified this particular piece of paper as why im losing money. The answer is, ill tell you why, over 110 million shares of this thing traded today. Thats incredible. Much higher than it used to be it sure wasnt meant to handle that volume and it cant now, there are many Hedge Fund Managers who thought there wouldnt be a lot of volume so may have sold call options against this which is the same as getting short or betting against it which would have been a fantastic trade for agents when there was no volatility just keep taking in that capital. Keep taking it in. Not anymore. No, no. Very big funds that bet against it and have to raise cash to stay short it. Either end the pain and buy it back or cover their call shorts or keep wagering by putting more and more of their money, you know how people like to bet more and more, they got a losing hand and put more and more out. A lot of people are doing that too. How . They have to sell stocks and sell s p futures they dont have the money on hand collateral i know it soups difficult to believe but managers considered this the trade for ages because they simply didnt believe that the vix would or could spike as fast as it did got caught plain out of position the second instrument, i path s p 500 shortterm futures, he can change traded note trades under vxx. This fund seeks to offer exposure to a daily rolling long position in the first and second months of the vix future contracts. Its another mouthful that is frankly another way to bet on the vix, futures going higher. Today this fund starting at 45 and it went to 55. You would have made ten bucks on this but forget about that if you had borrowed money and bet against it you would have lost 10 bucks that you didnt have to begin with that is a huge percentage of your capital if youre running a fund once again it sounds like something that couldnt hurt the entire market but nearly 85 million shares traded hands. Thats called impact the third is im giving you all of these i could tell you its the vix but it dont work for you. There is a Velocity Shares daily 2x vix shortterm etn or Exchange Traded note which is also known as the tvix which gives traders two times the daily return of the s p 500 shortterm futures index you cant make this up can you believe the s. E. C. Bl s blesses this junk if they knew what it was no today the tvix went to 13 1 2 a huge loss if you bet against it they have to sell something so they sold off your stocks, tvix, whos heard of it . Is traded 112 million shares that is insane the shortterm futures, ticker svxy which seeks again on a daily basis to provide investment results that correspond to the inverse of the performance of the s p 500 vix shortterm futures index this one goes down as the vix spikes ait did today and started at 12. 30 and sank to 9. 50. If you owned it but if you shorted it, you did well people probably borrowed money if they didnt they will have to put up a huge amount of collateral tomorrow. If you or your if i was your broker, ill sell you out tomorrow so maybe, maybe, maybe they sell your stocks out tomorrow so again you have to be thinking that anyone who wagered on these and borrowed money to do so has to put up collateral that spills into the marketplace or the market goes down you can argue much of the downward pressure was from various wagers going wrong and betters having to raise money to meet margin calls. Do you think that tooks went down, anything happened. I can look at the tape while im talking here i mean, Nothing Happened with those of these companies if you went to, you know, lets say you went to intel today. You think anything happened, no, all that happened is they had a stock and it got whacked by this stuff. These funds probably need to raise more money tomorrow when the market opens they are desperate they are flailing and they are crushing those people who own stocks and have done nothing wrong except happen to be in the crossfairs of these fire instruments. Theyre at least 12 others that are like that i know of but i had mentioned the ones with the biggest volume and have the most impact im not hearing anyone else talk about them maybe im nuts or real right or both we dont know when this tail wagging the dog will end sorry, dog lovers. I got two of them named nvidia if you follow the uvxy, the vxx,