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Cramer: Wait Out the Rally

As Wall Street hit a five-month high on Tuesday, Cramer told his “Mad Money” viewers to wait for a pullback before buying any more stocks.

“As much as I would love to tell you that a new year means new fundamentals, we are still stuck with the same old ones and for the most part the good news is beginning to be reflected in the price action, while the risks are no longer as evident in the market as they should be,” Cramer explained, adding that even though the market will likely continue to climb, it may not be wise to participate in it.

A lot of things have changed for the better, though, such as full capitulation by the Chinese government where a number of stocks hit their lows. The Chinese government suggested it’s done cooling its economy, prompting the metals to trade higher. On the belief copper is in short supply in China, copper miners Freeport-McMoRan and Southern Copper saw shares spike. With China’s non-residential construction firing back up, industrial stocks like Caterpillar , Cummins and Joy Global saw gains. More power plants will be built in China, too, benefiting companies like General Electric .

Another positive helping the market is strong U.S. auto sales data, Cramer noted. Auto parts maker BorgWarner and plastics maker Honeywell International are starting to see a pickup.

Meanwhile, Cramer thinks the U.S. housing market may be turning around. If this proves true, he said it could be a major engine of job growth.

While these three things have changed for the better, Europe’s sovereign debt crisis lingers. In addition, two of the hottest sectors this year — technology and financials — have Cramer worried. Early earnings reports suggest there may have been another downturn in spending on tech, Cramer said, and earnings being reported by the banks suggest the numbers will have to be lowered. Finally, the price of oil is not going up because of demand, but because of supply concerns primarily centered around a potential supply disruption on behalf of Iran and Cramer said he doesn’t like that “one bit.”

The bottom line?

“I think you have to be willing to miss the next phase of this rally by no longer buying up here, until we pull back and begin to discount the issues that haven’t changed, not just the ones that have,” Cramer said. “Ignoring the negatives in 2011 was an expensive proposition, and as much as I like the tone of 2012 so far, I’m not going to whistle too loudly past the graveyard.”

When this story was published, General Electric owned 49 percent of NBCUniversal, which operates CNBC and Cramer's charitable trust owned Caterpillar and Cummins.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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