Tight Supply Trumps Bearish Concerns

No supply coming to speak of. No deals being priced. Only two deals in the last three weeks. One last night. No wonder we've been so robust.

I believe that people don't really understand the roll of supply and demand in the day-to-day progress of the market. We have had only a Chinese semiconductor, Actions Semi (ACTS - commentary - Cramer's Take), and a pipeline company, DCP Midstream (DPM - commentary - Cramer's Take), come public in the last two weeks. Last night, a third, Vocus (VOCS - commentary - Cramer's Take), got priced at $9. That's not even a drop in the bucket. In the meantime, we have had lots of takeovers coming to fruition, springing a lot of new cash into the market.

What that means is that the dedicated monies into the market find themselves scrambling for stock, which is the effect you are seeing in the marketplace every day.

Usually, this pre-holiday period is chock-full of IPOs as investment bankers try to make their years. That means mutual funds and hedge funds have to sell stock to buy the new merchandise. But without the new merch and with the new cash from the takeovers, you get a bountiful, mechanical state that makes for a robust market and mutes any downturn.

Take Tuesday. The futures led the market down after the midpoint, a consistent downdraft that should have led to the market closing lower. Didn't happen, I think, because there is so much money still trying to find its way into the market.

I think that supply-demand concerns are trumping a lot of the bearish issues here. Don't forget, supply can be a killer, and we don't have any.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider DCP Midstream and Vocus to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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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 ActionAlertsPLUS. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here.