Money managers who missed the past year’s move keep harping on the same bearish arguments for why we won’t see the next key level, Dow 12,000. But Cramer on Thursday said these “bearish barricades” were nothing more than canards, fabrications that don’t hold up against the facts of this market.
The first argument is the idea of “sustainability.” Whether it’s a turn in the economy or a rally in stocks, these money managers say it just can’t last. However, Cramer doubted we’d see the rally in the Caterpillars , Emerson Electrics and Eatons if the turn wasn’t sustainable. At the same time, the so-called recession stocks – Merck , General Mills , etc. – would be rising, not falling, if a slowdown were imminent. One thing Cramer’s learned in his 30 years on Wall Street is that the long-term rotation out of foods and drugs and into machines and tech “means a long-term recovery.”
Second, there’s housing. The endless chatter about foreclosures continues, but that doesn’t jive with jumps in share price at banks like JPMorgan Chase , Bank of America and Wells Fargo . In fact, Cramer thinks a return in job growth will put an end to those foreclosures. After all, you don’t stop paying your mortgage if you’re getting a regular paycheck.
Money managers still talk a lot about the Federal Reserve, too. They say Chairman Ben Bernanke could raise interest rates at any time and kill the recovery. But has Bernanke at any point given us reason to believe he’d do that? Cramer said the Fed chief has “made every right move” and “will only take rates up when he’s confident that the economy’s healthy enough.”
On a technical level, people worry about the low trading volume, which some say delegitimizes the market’s gains. But as Cramer pointed out, we’ve rallied 4,500 points on low volume. This shouldn’t be a problem now.
Then there’s Europe and China, the former suffering debt and currency problems and the latter potentially on deck for a slowdown. But Cramer thinks bad news for the euro and Greece is good news for US. And most likely European money seeking a new home will flow here, “where the currency is stable and the growth is real.” And China today reported more than 11% growth in GDP. “That doesn’t sound like slowing to me,” Cramer said.
Lastly, there’s the specter of Washington. People seem to think that financial regulation – specifically in terms of derivatives – will hit hard the bottom lines of JPMorgan and Goldman Sachs . Strange, though, because their stocks have been ramping ever since the derivatives talk began. In the end, Cramer thinks the regulation will end up being “a huge victory” for both companies, and the other banks as well. So much so that he called this bearish barricade a “false roadblock supreme.”
There is a positive side to all this bearishness, though. It gives investors a chance to buy in before stocks take off. And they got one today, when the market opened down despite such strong earnings news.
“That gave you a chance to get in at a better price than you should be able to,” Cramer said, “on the Dow 12,000 freeway.”
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