The defensive stocks could do no right going into the end of the year, and the "offensives" -- which is what steel, cyclicals, oils and expensive retailers deserve to be called -- could do no wrong.

 

Can it continue in 2011?

 

I think so.

 

Take four comeback stories of the last few weeks: Williams-Sonoma(WSM), Xilinx(XLNX), Occidental(OXY) and Nucor(NUE). The last public pronouncements of all of these stocks were regarded as disappointing. I stress the word "regarded" because many of us were happy to hear that things hadn't gotten worse!

 

Yet what has happened? They took dips, and then they roared higher. Post continues after video:

Who can forget the miserable quarter that OXY posted, with its excuse of hard-to-get-at-and-d​eliver oil and gas from its home base in California. WSM guided down hard. Nucor said fourth-quarter projections -- already very low, having been lowered many times by the company -- could not be met. Like Nucor, Xilinx couldn't wait until the end of the quarter to lower the boom. It just plain disappointed.

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All were great bets. Meanwhile, consider the cases of Dr. Pepper Snapple (DPS) and Pepsi(PEP). They delivered their numbers and said all of the right things. But their stocks have done nothing but drift down. Clorox(CLX) and Kimberly(KMB) have been saved by their yields but look to be stalled or headed lower. I liked General Mills' (GIS) statements. The market sure didn't. And, most of all, McDonald's(MCD) is still being punished for missing a month's numbers.

 

To which I say forget the dollar, the euro and China. This move is all about U.S. employment growth. This is the kind of action you get when you see jobless claims going down.

 

I have caught up with some of last week's reading, and people are wondering whether the job growth is real or whether it even matters. They are ignoring report after report from the Fed regions. The recovering stocks of these companies that disappointed, though, are saying otherwise. I would rather own Nucor than General Mills. I would sooner own Williams-Sonoma than Wal-Mart(WMT) or Dollar General(DG). And I definitely want to own any offensive vs. any defensive now that jobless claims are below 400,000 and, I think, will stay there.

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The only exceptions to this rule would be the dividend stocks that sport 4.5% yields or better. They have more to run simply because I do not see bonds selling off heavily enough to make those stocks unpalatable. That's a pattern I am seeing with both Hudson City(HCBK) and Peoples United Financial (PBCT) in the banks. But they, too, could be signs of strengthening employment, big lumbering offensives getting ready to join their more nimble brethren.

 

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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