Cramer: Are Stocks Just Too High?

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After so many stunning earnings disappointments, why are stocks again making new all time highs? Is the S&P 500 ahead of itself?

That's a question Jim Cramer has been asking himself a lot, lately, considering a slew of quarterly reports were, at best, less than the Street had hoped for.

And the Mad Money host isn't just talking about Apple and it's gross margins which shrank to 37.5 percent from 47.4 percent a year earlier.

"IBM disappointed, which in turn drove the stock down 22%." said Cramer. "3M missed estimates and cut forecasts." "Also, AT&T reported a decline in revenue that was below market expectations. That sent the stock down the hardest I can ever recall in one day," said Cramer.

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And that's just the tip of the iceberg. Cramer added that Procter & Gamble's profit outlookfell short of expectations, Qualcommguidance was lighter than expected (though it did increase), GE earningsshowed that growth slowed, United Technologies raised concerns about Europe and UnitedHealth said profit fell.

Then there's the banks, Cramer added. Bank of America fell short of expectations and Wells Fargo resultssuggested its mortgage business was slowing.

And don't forget Caterpillar, Cramer added. Its earnings and revenuemissed Wall Street expectations and it cut the full-year outlook for 2013 to reflect a drop in demand.

Considering the results from these corporate behemoths call the global recovery into question, shouldn't you conclude that the market is frothy?

"If you didn't know any better you would most surely have shorted both the S&P and the Dow Jones," Cramer said.

However Cramer does know better – and he says there's a catalyst in the market that driving the advance – and it's a catalyst many individual investors might overlook.

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"Smaller companies are taking up the slack," he said. From drug companies and retailers to airlines and more, "The phenomenon is amazing and it explains why a hated market such as this keeps knocking on the door of the all-time highs list".

Therefore, even at or near all-time highs, Cramer thinks to bet against the market is a major mistake.

"As far as I can tell, there's only one way to look at this," he said. "If this market can go higher with lousy reports or guidance from Apple, IBM, 3M, AT&T, Procter & Gamble, Qualcomm, General Electric, United Technologies, UnitedHealth, Wells Fargo, Bank of America and more -- what happens when they come on board."

In other words, the Mad Money host thinks if you're heading to the sidelines now, you'll regret it.

"You will have missed the opportunity to buy before what is potentially setting up to be a very strong second half," he said.

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