On Friday the market zoomed higher and looked to be firing on all cylinders. Then Monday happened.
Both the Dow and S&P ended the session a little lower on volume that was lighter than usual.
"It's all about realism," said Jim Cramer on Monday's broadcast, "a recognition that not all is well and that we better be really careful or we can give up a lot of these terrific gains."
The Mad Money host said to better understand the market, it's valuable to get a handle on the catalysts which drove Friday's broad rally. They follow.
On the bullish side of the coin, the most recent purchasing managers report suggested the pace of economic growth had revived after seven consecutive quarters of slowdown. Specifically, the China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November, the latest indicator of recovery.
The strong PMI came after other data showed solid credit growth, firmer exports and rising industrial output.
All told, Cramer took the results as a sign that Beijing is committed to driving growth.
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However, China gives and China takes.
On Monday the market didn't get a Sunday night easing from China, which triggered worry in the market that the recent positive data couldn't be maintained without more interest rate cuts.
"Greek deal talks were in the air on Friday, and that translated into strength with industrials as well as big banks such as JP Morgan and Goldman Sachs.
However, on Monday it remained unclear whether the EU members could find common ground on the ways in which to reduce the nation's debt. Read More: "Will It Be Third Time Lucky for Greece?"
"We got some terrific news Friday, said Cramer; We found out that Walmart, a company that typically rings up a billion dollars a day in sales, was forecasting the biggest pre-holiday buying ever." And other retailers made similar predictions.
Then on Monday, other reports suggested that there wasn't as much follow through to the initial sales from Thursday night and Friday. "That, I think it is nonsense," said Cramer.
"We headed into the weekend with lots of talk about good feelings over a possible deal to avert the fiscal cliff, including Republicans that are breaking ranks with the hard-line and are willing to talk about raising taxes if the Democrats would be willing to do meaningful entitlement reform. That positive tone, the rising above, helped move up the futures right into the bell."
Yet on Monday, blustery rhetoric swirled which reminded investors that the road to a compromise would be bumpy at best. Read More: Fiscal Cliff - America's Looming Economic Crisis
What's the bottom line?
"I believe that the Chinese momentum is lasting," said Cramer, "and holiday sales are relatively strong. Europe, however is a total black box."
The fiscal cliff appears to be the x-factor.
"If we get a deal on the cliff, then I think we go higher, maybe much higher aided by Chinese strength," said Cramer. If we don't get a deal on the cliff then I expect the market goes down with Europe driving losses."
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