Cramer: Yellen could trigger a historical decline. Here's how to play it

It might seem hard to imagine, but Jim Cramer wouldn't be surprised if the bears declare the "end of the world" on Friday if Janet Yellen takes a hawkish tone when she speaks. "If she even mentions putting a rate hike on the table in September, it is entirely possible we will be talking about how ugly next Monday will be, not unlike the down 1,000 point Monday a year agо. During this week last year, fear of a meltdown sent the Dow 2,000 points lower over the span of five days. It was a record-breaking event that had not occurred since the dark days of the Great Recession of 2008.

A storm of decline was triggered when the Chinese market began to collapse, and investors watched in horror as the Shanghai composite dropped to 2,964 from 3,993 after its fall from 5,179 earlier in the spring.

At the same time investors began to understand the large repercussions of lower oil prices as crude fell below $40. Markets also worried about the more than $300 billion of debt that oil companies carried with banks.

In the middle of this chaos, Federal Reserve official James Bullard gave a radio interview and made the case for a September rate hike. Cramer remembered that day vividly on the stock exchange floor while he watched stocks fall at the open in response.

"I even made the case to do some buying into weakness, so of course, I was quickly dismissed as a ridiculous perma-bull in the face of the inevitable collapse that we have all been waiting for," Cramer said.

That inevitable collapse never happened.

In fact, the Dow has rallied so hard it is now up nearly 1,000 points from the beginning of last year's big sell-off, and more than 3,000 points above the lows.

China never really went lower than it did that day, the Fed did not raise interest rates in September and it turns out that $40 oil was not as catastrophic as many thought.

Yet, it seemed to Cramer that investors are once again acting as if the world is about to end.

On Tuesday, new home sales data showed the strongest levels since 2007. The second-quarter earnings were remarkably good. The Nasdaq Composite recently hit all-time highs, and many stocks continue to rise.

"It's almost like no one believes the move is real, even as the methodical, resilient way that this market has advanced is textbook bullish," Cramer said. "I offer no apologies about that judgment. In fact, I feel like if I don't point it out, nobody will."

So, if the bears once again call for the end of the world when Yellen speaks on Friday, Cramer promised to take out the charts of what happened in the crash of 2015. It was just three months later that the market was pretty much back to where it started. While the levels were briefly tested again in February, these declines are typically just another buying opportunity.