short sellers feared europe may do something right over night and feared losing all the juicy profits gain in the last eight weeks. remember, they like to take profits, too. people are always looking for analogs, analogies, patterns, touchstones that help us figure out where we can go, how low, how bad. look, it's the right thing to do. we only have our history. if we ignore it we're obviously doomed the repeat it. before i lay out how bad things could get which is the so-called worst case scenario, everything i'm about to tell you can be averted, averted by concrete signs that the europeans are going to address their problems and the chinese are going to cut rates. we won't go worse case if -- at the germans begin to compromise with the have-nots or bank deposit insurance and saving euros and at the same time issuing euro bonds that can buy sovereign debt. that plan has been shot down so many times by chancellor merkel that it seems it's become a pipe dream. listen, we're at crunch time. the bank runs are too furious, the collapse too imminent to close our eyes to what the worse case may be. as much as i don't even like to trace it out, frankly. let's deal with the two worst cases the bears out there tell me ring true. seem to be in the realm of possibility. we're going to go put on our bear hats. this is what we come up with. the first worst case is the ugliness that was 2011. not that long ago. the dow is about 1300 points lower than we are now, little more than 10%. how about the s & p. 2011 scenario down to 1,099 in october, 1,119 in august. again, we're at 1247. we would have to go down more than 10% to take out those lows. as horrible as that scenario may be, the book's downright rosy versus the most frequently cited great case, the nadir of the great recession, march 9, 2009. the dow fell to 6900. s & p dropped to 676, a 50% decline. wow. that is a worst case. what we have to do is figure out how much better or worse we are right now versus the last time we got to those levels. that's how we decide what the worst case can be. first, we have to ask, is it even possible to repeat either history? the answer is unequivocally yes for the first worst case. it's a resounding yes, actually, given that so many things are indeed going wrong now. but the doomsday 2009 scenario before i even outline it, i'm taking it right off the table. i went to law school because i wanted to be a prosecutor so i'm prosecuting the two worst cases then i will follow up with mitigating factors, the defense that can keep the worst cases from occurring. let's start with what happened last year. why couldn't we repeat 2011? hey, come on, there's more wrong now. things are worse now. they're worse than when we hit those lows 10% ago. europe's in much worse shape than it was back in the summer and early fall of 2001. china has cooled since last summer. maybe not considerably but cooled. india and brazil have been robust. they're decelerating. rather fast. in a year where the charts do matter last week we fell below the 200 day moving average. many believe that caused the huge selling vacuum last august. our own gridlock is back, no changes except positions have hardened. closer to a fiscal cliff where government stimulus dies and taxes go higher. we could even have another debt ceiling debacle and another debt downgrade. oh, boy, they're negatives. last and most important, our employment number. while we're still trending above last year we're falling for certain. with the new trend line of the last few months we will be worse than last year. so 10% decline taking us back to lows of 2011, frankly, it is definitively on the table. now, some mitigating factors. first, there's the only game in town this year. last year rates were still high enough to offer alternative stocks. not anymore. the ten year yielding 1.5%, you're getting a much better deal from dividend paying stocks, especially after the favorable tax cuts. even if you strip them away you're doing better. the dow yields 2.77%. hey, almost twice treasuries. not too shabby. second, our housing market stabilized while it was in freefall a year ago. the auto market is stable, 11 million going to 14 million. that's huge. that's the driver of the economy. profits are very strong. companies have developed rock-hard balance sheets because they used the fed's mandated low rates to refinance just like citizens have refinanced their balance sheets. finally, commodities are coming down and coming down fast which is a giant win for the consumer. could give us a true tailwind for domestic stocks and allows the chinese to cut like mad because that's what they were worried about. i think it's a push that we can go down to last year's lows and nothing better. that's why 50/50 chance we do it which is why i have stated this def-con two for fear the europeans mess everything up. too much going wrong now. we're just in worse shape than we were in 2011. the scenario cannot be ignored because it's a possibility. it may even be a probability. the rap on 2009 is we have not just one large bank failure in europe but the whole countries have failed. logic says we could experience a great recession two except this time it would imported from a declining europe. evidence for the prosecution? we have to believe a collapse of italy and spain could be catastrophic for the whole world. undeniable. second, the fed does seem to be out of ammo. more on this later. we already have incredibly low rates. the only safe place may be in treasuries. that's frightening. easy ain't cutting it anymore. if china keeps slowing while india and brazil continue to break down, we'll be the only growth engine left and our growth is sputtering. there's no safe place to turn this until like 2009. emerging markets being the same reason the ship righted itself. how about mitigation to that? what makes a repeat less likely? credit is much easier now than it was then. you can get loans. europe could shut down some credit worldwide but our banks are so much stronger than they were, much stronger than we had any idea back the way it was. we could have a collapse like 2008 where the economy just stopped and you know what, i still think you get credit flowing and it would pick right back up. second, we're creating so many more jobs. we have far fewer homes for sale and mortgage rates are low. it doesn't make sense to stay on the sidelines. there's too much opportunity to buy pretty much anything with low rates, hence, why real estate investment trusts are so strong. finally, the yield factor. i have to keep emphasizing this. while almost 200 companies cut dividends in the great recession, the dividends are coming back. we've had 27 to 30 dow stocks raise their dividends since the bottom, balance sheets are amazing. forget dow 6500. if the dow even fell to 8,000, it would yield 4.2%. that's crazy. given how strong these companies are i doubt we would see big dividend cuts around this time so 4.2% is a realistic figure. put it all together, we are certainly worse off than last august or october so it does seem that should happen again. but we're nowhere near as sick as 2009. the worst case, i think it could be below the levels where we bottomed last year which would imply a more than 10% decline but nowhere near the almost 50% decline of 2008-2009. the bottom line, if we don't get a resolution in europe and instead get the collapse of italy and spain, the worst case is on and it is reasonable to believe we can take out last year's lows and perhaps go a few percentage points lower. but it's not realistic to expect a return to 2009's lows. there's too much that's better, including our banks, our balance sheets and most of all, our dividends which will keep us from getting anywhere near these depths. worst case scenario, a little worse than 2011. rob in florida, rob. >> caller: boo-ya, jimmy cramer. because of you, i get to deep sea fish a lot. it's expensive so thanks for what you do for us. >> hey, man, look, i was out catching fluke this weekend. i got an 18 1/2 and 19 incher. we had to throw them back. the limit's 19 1/2. i think that's wrong. that would have been good for dinner. >> caller: beautiful. >> honor system. go ahead. that's more of an angler show. go ahead. >> caller: i'm curious about pro shares ultra short, low. euo. you know -- >> yeah. i know. >> caller: portugal, the last two days, it's actually gone the other way so is this a good time to get back into euo? >> i don't like these instruments, including the euo. i think they could get you all down the wrong way. if anything good happens you're going to lose a fortune. even if nothing happens, you may not make any money. i say ixnay on that. avoid those countries. that's good enough for me. worst case scenario, you see no resolution in europe and spain and italy collapse, what happens? we will take out last year's low. i'm going to tell you that that is for certain. will we go back to 2009 march? no. balance sheets, banks, they're all in better shape. we're in worse shape than 2011 but a lot better shape than in 2009. "mad money" be right back. >> coming up, the best medicine? as investor concerns over europe continue, cramer is helping you vaccinate your portfolio against potential losses. and there's no better way to do it than companies fighting the battle against cancer. tonight, jim speaks to a pair of ceos on the front lines to see if their innovative treatments could set them apart from the pack. and later, losing interest? is the focus on the fed giving you interest rate overload? jim's breaking down the figures ahead of bernanke's testimony on thursday to give you a clearer picture of what it all means. and where the fed could head from here. all coming up on "mad money." >> get your mad money text alert today. text mm to 26221 to get cramer right on your phone. visit madmoney.cnbc.com or give us a call. how much coffee are you fellows going to need today? three...four cups? 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[ crack of bat ] [ male announcer ] hanging out with cal has its benefits... so does taking one a day men's. go to stayinthegame.com to enter for a chance to meet me and watch the 2013 mlb all star game. to enter for a chance to meet me veet wax strips have a hair coating technology that leaves skin smooth for up to 28 days. try getting that with a razor. veet. what beauty feels like. we have product x and we have product y. we are going to start with product x. the only thing i'll let you know is that it is an, affordable product. oh, i like that. let's move on to product y, which is a far more expensive product. whoaaa. i don't care for that at all. yuck. you picked x and it was geico car insurance and y was the competitor. is that something you would pay for year after year? i, i like soda a lot but for a change of pace... i don't want to downplay the awfulness of this moment in the stock market although we had a nice rally at the end of the day. i need to point out that even though things have gotten tough around here there's still some stocks worth speculating in and for at least doing homework on. sure, you have to be a lot more selective and careful but even this market has winners and i don't want you to miss them because the slow motion financial collapse of europe has made you blind to opportunity. the pervasive sense of fear is creating opportunities left and right but you got to know where to look. right now the american society of clinical oncology is having its annual meeting and this has been a great event for junior drug companies coming up with revolutionary ways to combat cancer. cancer being a big rubric for a lot of diseases. this year the conference is being somewhat ignored even though pharma and biotech stocks are as recession-proof as it gets. whether talking about the recession in europe, the global economic slowdown, this is not about employment number, people. you might not buy a new tv set because the economy's lousy or new car but medicine? cancer killing, something that can combat cancer? that's the kind of purchase you don't defer, not for any reason. right now we're getting tons of terrific data from this conference but it seems the market couldn't care less. people are so terrified. take immunogen, imgn. this company is a long time cramer fave company, develops next generation cancer treatments, specifically their technology allows cancer drugs to work like tumor-seeking missiles. you read about this all the time in the paper. it's these guys behind it. missiles that target and kill cancer cells while leaving the rest of the body mostly unharmed. that is a huge improvement for chemotherapy. chemotherapy is just like carpet bombing the whole body. this does not do that. this does not just hurt all cells. it hurts just the cancer cells. it's licensed this technology to five of the top ten oncology companies and just this morning we got positive data on not one, but two drugs they're working on. first, bullish data on tdm-1, apologize for the gibberish, a breast cancer drug that is expected to hit the market next year. second, we got positive phase one results from a non-hodgkin's lymphoma drug. this was a great day for immunogen. stock closed up 2.9%. stock has given you a 79% gain since i first got behind it in november 2009, up 29% since we last heard from the ceo on september 26th. the story is too good to be ignored. don't take it from me. let's talk to daniel junius, who has been incredibly straightforward since we started this show, the president and ceo of immunogen. let's learn about the latest data and where this company is headed. welcome back to mad money. >> caller: thanks, jim. nice to be here. last time you were on, you said we could see breakthrough results for tdm-1. this is -- i'm quoting from some research came out today, the largest benefit ever demonstrated in metastatic breast cancer. this is huge news. i know the times picked it up. walk us through what you revealed today. >> well, actually, it's a study sponsored by roche so roche is running the study. they revealed the data at this conference. what it said was you're able to provide a more -- a greater benefit to the patients and the most significant benefit element that they showed was after two years on study, patients showed about a 17 per 100 patient survival benefit, so that means for every 100 patients in this study, after two years, 17 more were alive who had been on tdm-1 than on the control arm. i think that's a staggering statistic. at the same time, it showed very good efficacy benefits. about a third less serious adverse events that patients experienced and it was even the nature of those events were more manageable by oncologists. so the comments that have come out from people at the study is you're actually telling us you have a drug that works better and is more tolerable to patients. how often does that happen in this business. >> i have a friend of mine in this study. it's rather remarkable. she is much better than anyone thought she would be. now, that may be an aberration, don't want to give people false hopes, but one thing is very clear. she was asking me why is everyone not taking this right now, why doesn't the fda say from now on, this is the course of treatment, because it's that much better. >> well, you have to go through a process and the fda wants to ensure that we have a safe compound that they're making available to patients. they want to be able to inform oncologists of the profile of the drug so they know how to use it. but again, the enthusiasm you hear from oncologists is they want to be able to adopt this quickly for the defined patient population because they know it's going to be a better patient experience, both again in terms of success of treating the disease as well as the patients not dealing with all of the adverse effects. your question about why aren't they using it now, it's not approved now, but the data from this study will allow roche to file, they have indicated they will be filing for marketing approval in the u.s. and in europe this year, and in the u.s., they'll be looking for priority review, which means that within six months of submission, assuming the fda accepts it for priority review, they'll make a ruling in terms of whether it will be available to be marketed or not. >> i want to speak to the other drug, this non-hodgkin's lymphoma but that's much earlier stage, right? >> well, the data's earlier stage. it's not a registration study. the data was actually from phase one studies that were conducted by sanofi, and what sanofi was doing through the phase 1 studies is calibrate how they dose patients so maintain the efficacy they saw in the phase 1 study without generating a certain type of toxicity. they were very successful by modulating how they administer the drug and able to maintain that efficacy without having a particular tolerability issue. they now have it in three different phase two studies so that's the next step on the way to registration, looking at patients with two different subtypes of non-hodgkin's lymphoma. two of the studies are looking at the compound on its own, another in combination with the standard of care for non-hodgkin's lymphoma. they may be ready to put this into a registration study as early as next year. >> that's better than i thought. my friend adam writes for the street.com was pointing out to me, i'm just going to quote what he says so not to be biased, he goes unfortunately, immunogen hasn't invented a way-back machine to allow the company to renegotiate its mid-single digit royalty on tdm-1 sales. they bake in multi million dollar tdm-1 sales. the smith single digit royalty does cap how much you can make on this, doesn't it? >> well, it does, but look, we entered into agreement with roche in 2000 when the technology wasn't validated. it was a big gamble on genentech's side to put the money into developing it and quite frankly, who knew we were going to have the level have success that was here. even with that structure, jim, this has the potential to be a significant economic benefit to immunogen and beyond that, what you get from the data that's been generated by tdm-1 and what we're seeing with the roche compound as well as our own is this is raising the visibility of the technology that we've developed. we have ten compounds in the clinic using this technology, three of them our own. so while, you know, given the results, it would be nice to be getting a richer revenue stream from genentech, it's a legacy economic deal. the potential is very strong for us to be yielding great results both from our own compounds economically as well as those from more recent deals such as those we did with lily and novartis. >> you have been very straight the whole way with us. it is a big story. i thank you so much for sharing your information on our show tonight. thank you. >> thank you. appreciate it. >> dan junius has said some things that i actually question about whether they could be true. you just heard how big this drug can be. yes, it's a smaller royalty stream than we would like but the company's here, it made it. most can't get to this state. i think this stock goes higher. stay with cramer. >> coming up, losing interest? is the focus on the fed giving you interest rate overload? jim's breaking down the figures ahead of bernanke's testimony on thursday to give you a clearer picture of what it all means. and where the fed could head from here. and later, the business of hope. treatments are being developed to transform