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The rally will continue. Cramer has already said that a few times this week, and the message was the same for Thursday’s show. He’s a believer now because the market’s fundamentals finally are signaling the chance for a sustained moved higher. Here are seven reasons why you should be a believer, too.
1. Retail sales were better than expected. Granted, they were down, but not as much as Cramer anticipated. With gas prices low, consumers are opening their wallets again, even if it’s at discount stores like Wal-Mart [WMT
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]. This makes beaten-up stocks like Lowe’s [LOW
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], Costco [COST
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] and WMT attractive again, Cramer said, because there’s a chance for a rebound.
2. Bank of America [BAC
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] joined Citigroup [C
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], JPMorgan Chase [JPM
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] and Wells Fargo [WFC
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] in announcing that it, too, was profitable. These banks are making money again. If the government follows Federal Reserve Chairman Ben Bernanke’s suggestion to focus less on the bad loans these companies made, then we could add another 500 Dow points to the 239 we gained today, Cramer said.
3. Standard & Poor’s downgraded General Electric’s [MOS
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] credit rating, but the stock went up anyway. The fact that this bad news was already baked into GE is a big change for the better, Cramer said, and the market couldn’t rally without it.
4. The pharmaceuticals sector has seen $193 billion worth of takeovers in over the past month. Merck [MRK
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] bought Schering-Plough [SGP
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], Gilead [GILD
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] picked up CV Therapeutics [CVTX
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], Roche snatched up Genentech [DNA
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] – and that was just this week. The strongest companies are finally taking advantage of the bargain-basement prices the market is offering.
5. The added bonus to the pharma M&A activity is that investors are putting their profits right back into the market. That’s why every drug stock was up Thursday. This new money, Cramer said, is another key requirement for a continued rally.
6. Earnings upside surprises in tech. Taiwan Semiconductor [TSM
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] just announced better-than-expected business thanks to a recent rush of orders. Aside of IBM [IBM
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], that’s the only earnings beat in the sector during this downturn – another big positive.
7. Mortgage rates have dropped significantly, and mortgage applications are up big. At the same time, new-housing permits are low, which makes Cramer think the housing bottom is in.
Lastly, General Motors [GM
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] said it didn’t need that last $2 billion from Washington. This is another first: the first time an automaker hasn’t needed extra cash. Sure, we’ve already given Detroit a boatload of money, but this wave-off is still a plus.
Given these seven signs, Cramer said, we aren’t done yet. And if Bernanke and Treasury Secretary Geithner can fix the banks and President Obama solves the employment and housing crises, the Dow could surge another 1,000 points.
Cramer’s charitable trust owns General Electric, Gilead Sciences, JPMorgan Chase, Wal-Mart and Wells Fargo.
General Electric is CNBC’s parent company.
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