Mad Money

Herculean Force to Drive Stock Market: Cramer

Don't Fear Market Pullbacks: Cramer

"I don't expect this pullback to last long," said Jim Cramer. "We have a powerful force pushing this bull market higher."

By powerful force, the Mad Money host was referring to the herculean attempts by money managers to keep up with the advancing averages. Largely Cramer expects a massive chase for performance.

Here's why:

"Most money managers are fixated on top down analysis," he said. "They correctly detected the cessation in business that this country was undergoing and pulled in their horns, in some cases dramatically."

In other words, going into 2013 money managers went into cash, concerned that fiscal cliff fall out could drag down the market as much as 10%.

But there was no fall out.

Alan Copson | Photographer's Choice RF | Getty Images

At the same time, the retail investor returned to the market with gusto. Over $22 billion flowed into long-term equity mutual funds and exchange-traded funds in the week ended Jan. 9, according to Bank of America Merrill Lynch. That was the second-highest amount on record after the $22.8 billion that went into all equity funds in September 2007.

On top of that, the Fed has kept rates low, making dividend stocks all the more desirable.

Also, the housing market got relatively betters and in the wake of super storm Sandy, billions of dollars have started flooding the economy to rebuild that which was destroyed.

"This confluence is fabulous for our economy and for stocks. Since the beginning of the year the S&P 500 has advanced more than 5%. But it happens to be a nightmare for money managers," Cramer said.

More from Cramer:
How Long Can Bull Last?
10 Companies Ripe for M&A
At 14,000 Is Dow Expensive?

"Bearish managers have to scramble to keep up," Cramer said. "They are being forced into the markets to compete with the passive indices to justify their own funds. There are just too few negative catalysts threatening the advance for them to do anything else but buy, at least for the time being."

Of course the market will inevitably cool down, it always does. But Cramer sees the cool down as a slower advance, not a whoosh lower.

"To me the bottom line is clear," he said. "Fund managers have to chase stocks and put money to work on up days and down days like this one to keep up with averages. We can have breathers like the pullback on Wednesday, but I see pullbacks as pauses that refresh and nothing more."

Call Cramer: 1-800-743-CNBC

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