Stick With Strong Stocks in a Rebound

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Calpine's (CPN - commentary - Cramer's Take) on the rebound. Williams (WMB - commentary - Cramer's Take) is on the rebound. Computer Associates (CA - commentary - Cramer's Take) is on the rebound.

Oh heck, everything's on the rebound. We are in the rebound phase where an explosion of money in has taken the pressure off managers who needed to sell stock to meet redemptions. "Money in," as managers universally call it, is the ultimate elixir in this business. You can make things right with new money. You can average down on dogs. You can stop selling. Brokers see you buy instead of selling. They understand you aren't going belly-up. They cover the shorts that they had against you, as people are always leaning against the stocks of managers in tailspins.

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It's a beautiful thing.

How long does it last? That's the tough question. If you asked that question in 1997, the answer would have been "three years" and no one would have believed you. I think that we will be surprised how long the "bad" can go up, as the short squeeze alone can last for days.

Ultimately, though, how much is a Calpine really worth if oil isn't spiking. Ultimately, Williams is an indebted stock with a good yield that might or might not be safe. Ultimately, the execs who run Computer Associates have lots of margin debt and can't be counted on to do anything but sell stock.

In other words, let these dogs run. There are plenty of good stocks that can go higher. No need to scrape the bottom of the barrel. Because, somehow, if the money stops flowing, you will be left just with stocks that went up solely because selling pressure is over and not because there are more buyers than sellers.

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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail].