Cramer: Washington Creating ‘False Tells’ in the Stock Market

On the day mandatory budget cuts are to begin, CNBC's Jim Cramer said Friday that market fears about Washington's gridlock are creating false perceptions.

"The zeitgeist is so overwhelmingly negative when it comes to Washington that you always have to remember it has produced a lot of 'false tells' for the stock market," Cramer said on "Squawk on the Street."

Cramer has been making that case for some time. arguing that the resulting negative sentiment about the market falls apart when the prospects of individual companies are taken into account.

Cramer pointed out that the sequester is likely to cause an uptick in unemployment claims, with some civilian government workers losing their jobs. "Maybe the claims will go to 380,000," he said, but added that out-sized negativity is likely to create buying opportunities in individual stocks.

"My problem has always been that macro picture has looked dicey on any given day," he said, pointing out that earnings have been good for many individual companies, such as or Best Buy. (Read More: Earnings Blow Past Forecasts and Best Buy Earnings, Revenue Top Estimates)

"You try to figure out how to make money in an environment where the top is bad and the bottom is good," he added, referring to the relative size of the macro market as the "top" and individual companies as the "bottom."

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"I end up with the data of the companies. How does Gap Stores, a major retailer, report such good numbers?" he asked, "The answer is that they are executing well, doing some international work, the U.S. is not that bad."

"It just did not play out. The end of the payroll holiday tax did not play out with the retailers," he added, the prospect of which caused fear and uncertainty in the market prior to January 1. "It's like with the fiscal cliff, if you got out, you got killed."

"In each case when you view the individual components of the Dow—such as American Express, GE, Cisco, HP or Caterpillar—you can make a strong case that we're not done," he said of the rally. "Just look at the components of the Dow. There are so many companies that are doing well. As things firm up, you're going to like it more, not less."

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul