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How Negativity Prompted This Rally

This bull market has in fact been a bear market unraveling, Cramer said Monday. The “overdeveloped sense of skepticism” he has seen from both analysts and short sellers has given way to rallies in any number of sectors.

But not because these two types of negativists have conceded that their arguments are wrong. If anything they’ve dug in their heels.

Strong quarters from 3M and Bucyrus International ? The analysts still hate ‘em. Unexpected rebound in natural resources? The analysts shrug. A wave of massive demand for smartphones, Apple iPads and like? Wall Street’s research firms doubt their longevity.

Nowhere has this attitude been more apparent than in the PC market, whose death has been predicted for some time. Here’s what J.P. Morgan had to say about Intel back in early August: “As a result of the fall-off in order rates, we are lowering estimates … Although our checks do not indicate any decline in order rates in other end markets, we expect the weakness to show up in every end market, just as it always has during downturns.” What has happened instead, though? Intel’s up 21 percent from its $17.67 bottom, hit on Aug. 31.

The auto-parts industry saw similar ridiculousness on Monday. Bank of America, Goldman Sachs and FBR all scanned bullish data on Advance Auto Parts , which reports Wednesday, yet failed to upgrade the stock. The first two maintained their “neutral” rating, while FBR actually downgraded Advance Auto to “neutral” from “buy”—even though FBR upped its earnings estimates and raised its price target on AAP to $70 from $64.

“That’s insane,” Cramer said.

By being proved wrong, though—as we’ve seen in the aforementioned industrials, commodities and gadget tech—these analysts have helped fuel a rally. Investors see the flawed reasoning for what it is and buy the aforementioned industrials, commodities and gadget tech stocks. And the chemicals, autos, auto parts and PC plays, too. It’s these investors’ total refutation of the analysts that’s behind this move.

Where the analysts have seen adversity, investors have begun to see opportunity, and that’s what’s taking this market higher.

Cramer thinks housing could be next. It’s another sector that’s been written off but is primed for improvement.

“Even as I’m sure the analysts will once again fight that thing every step of the way,” he said.

When this story published, Cramer’s charitable trust owned Intel.

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