Cramer: 'We’ve Seen the Lows for the Year'

Five out of the six things that absolutely had to happen before this market could sustain a rally have happened, Cramer told viewers on Monday. While the list isn’t yet complete, he thinks “it’s time to get more bullish.”

Back on June 2, Cramer said that stocks wouldn’t run unimpeded unless the following key events occurred: Financial reform was finalized, Spanish banks stabilized, unemployment declined, BP’s plugged its leaking well in the Gulf of Mexico, China pulled off a soft landing for its overheated economy, and the euro stopped falling. Well, all but the unemployment problem are either solved or very close to being so.

President Obama may not have signed the financial-reform bill, but we’ve seen the fine print. Now we know that fears the legislation would cripple American banks’ capacity to make money were overblown, and that means those banks can rally. Check.

Spanish mega-bank Banco Santander has jumped about 50% since June 2, thanks to some smart diversification away from its home country and to the UK, US and Latin America. The results of the European bank stress tests won’t be out for another two weeks, but Cramer is confident enough in STD’s turnaround that he’s willing to check this one off the list.

BP is close to putting a cap on its leaking well, and a relief well isn’t that far off. Admittedly, the company hasn’t had the best track record so far, but even Boone Pickens told Cramer that he thinks the relief well will work. That gives Cramer enough confidence to check this box off the list as well.

As for China, that problem has already been solved. The country has in fact engineered a successful soft landing, which is why Cramer stopped worrying about this point weeks ago. Now, he said, he’s feeling even more bullish on about the country’s moderating but still positive growth.

The euro, meanwhile, has done exactly what Cramer called for: It bottomed at 118 versus the dollar when France and Germany agreed to stop the naked short-selling of all European financial instruments. And it has since rebounded to 125. Check.

The lone holdout is unemployment, but Cramer sees some positive signs here. He thinks the strength in autos, retail and exports will create jobs, especially because the Obama administration seems less intent on hurting American businesses. Plus, the brokers are hiring, particularly the Japanese and European firms, and that usually precedes an expansion on Main Street, Cramer said. And don’t forget about the better unemployment claims we saw last week. We’re on the right track, for sure, but not so much that this box deserves a check, though.

With five out of the six worries now out of the way, Cramer said, “last week’s 5% rally was totally and absolutely justified.” And that means the hyper-negativity that has permeated this market “is no longer in synch with the facts.” So while we can’t yet be totally confident in the market until all six boxes are checked, we can get more bullish and believe in the market’s ability to rally.

“I think we’ve seen the lows for the year,” Cramer said, “and I am a buyer, particularly if we get any pullback of 3% to 5%.”

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