Stocks still trumping negativity

After overcoming so many potential pitfalls in January, this market is strong and going great guns despite the catcalls and worries.

By Jim Cramer Feb 1, 2011 10:09AM

jim cramerWe just finished the best January since 1997. That means we triumphed over so many things: dollar strength (somehow always viewed negatively now that we are an export nation), Chinese inflation, European weakness, Portuguese bond auctions, Irish collapse, weather damage and, so far, chaos in Egypt.

 

We did it without employment growth. We did it without any sign of a turn in housing, just stability, and even that's been questioned or dismissed by people bearing a survey or two that shows things aren't up to what we expected by now. We did it in the face of rampant commodity inflation that was supposed to destroy the margins of just about everything but has really impacted only the likes of Procter & Gamble (PG) in a way that nobody seemed to see coming.

 

We had a January rally despite constant harping that we were already too high, that we have stretched valuations and that we have come up too far too fast. We did it despite tremendous hand wringing that the best trade was the short trade -- betting against stocks.

 

And I have to think that, yes, it does matter that we can triumph over all of these issues, because what it says is that the market is strong and going great guns despite the catcalls and worries.

And I have to believe it, because I think this market has fewer adherents and more bearish traders and more worries after this advance than before it. Friday was the latest in a series of "get out now" broadcasts that we have had in the market, and I think it was well heeded by many. In fact, I think if the market had opened Saturday we would have been down an additional 2% to 3% on the strength of some footage of a few buildings burning in Egypt.

 

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The negativity remains the best thing this market has going for it. The pessimism. The constant vigilance. The noncomplacency. The shorting of every rally -- not the selling but the shorting.

 

I think none of this seems to matter to people who don't like the market. We've developed a permanent set of bearish investors because of the pernicious 2007-09 market as well as last year's flash crash. These permanent pessimists are outrageously powerful -- far more so than the cowed bulls -- and even the bullish traders seem to be of the "down 3% to 5% I like it" variety.

 

So now February begins, and I am sure it'll start right off with the notion that Monday was just an end-of-the-month marking, that it can't get any better than it is already and that we are unlikely to go higher from here.

I reiterate that I predicted that this year would be up slightly more than 15%. Nothing has changed that prediction. Certainly not the January performance.

 

At the time of publication, Cramer had no positions in the stocks mentioned.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Follow Cramer's trades for his Charitable Trust.

 

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