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Stop Trading!: What Sparked the Rally?

The Dow has turned up Tuesday afternoon, much to the Street’s surprise.

With the futures trading down before the market opened, investors were predicting a bad day for stocks. But by mid-afternoon the Dow was in positive territory.

Such a scenario is “the most bullish thing that can happen,” Cramer said during Stop Trading!.

What sparked the rally? An upgrade in Lehman Brothers is taking hold, and CIT has sold its bad mortgage and home-equity loans to a private equity firm. Then Apple and Research in Motion have reversed direction and are leading the Nasdaq.

Even a stock like General Motors could rally, Cramer said, though he re-emphasized his dislike of GM.

There’s talk that this could just be a rally in a bear market, but with the Dow down 20%, Cramer said it feels like “real capitulation” to him. There are “little pockets of strength everywhere,” such as in VF Corp. and Costco.

“I think the shorts have to cover,” Cramer said.




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