Plotting the Course

How high can we go? That's pretty much the only question worth asking after you put in a bottom, as we did after the Bear Stearns (BSC - commentary - Cramer's Take) collapse.

Nobody's talking about a new bull market. But let me give you some thoughts about what has happened in the past few weeks to make it so that you could become more positive.

First, we went down so much because the systemic risk in the biggest part of the S&P, the financials, was overwhelming. It is why we "overcorrected" because the market feared -- and shorts pressed their bets -- that the following institutions could go under: Bear Stearns, Washington Mutual (WM - commentary - Cramer's Take), Wachovia (WB - commentary - Cramer's Take) -- yes, Wachovia, because of the miserable buy of what turned out to be a really reckless lender, Golden West -- Lehman Brothers (LEH - commentary - Cramer's Take), Merrill Lynch (MER - commentary - Cramer's Take), Citigroup (C - commentary - Cramer's Take), National City (NCC - commentary - Cramer's Take), Capital One (COF - commentary - Cramer's Take) and even Wells Fargo (WFC - commentary - Cramer's Take). Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take), too.

We also felt that the Fed and Treasury would not be engaged, or might not even care.

Bear changed all of that because the regulation of the banks shifted from the Fed to Treasury, and Bob Steel at the Treasury wasn't going to let the whole shebang go under on his watch, as it very well could have under the Federal Reserve. Steel spoke the language, knew the players. Bernanke knew none of them and was totally reliant on the New York Fed, which had failed repeatedly to create programs that could turn around the situation. The move by Treasury was a total surprise given Hank Paulson's inept handling of the implicit guarantee of agency paper, which of course broke the back of Bear and almost broke the bank of Lehman, as suddenly you needed real collateral for paper that had been considered sacrosanct.

Once you had Bear saved, you knew you had a backstop for all the rest. The fact that we didn't go down, let alone crash, after that Sunday shotgun wedding between Bear and JPMorgan (JPM - commentary - Cramer's Take) was the bottom, and that's what people are grasping.

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Jim 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. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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