Inflow of Money Trumps the Bad News

Here we go: Bias says sell off. Time for a selloff. After being up for nine out of 11 weeks, it's time we went down. We should go down because we don't know what's going to happen, and Europe's down, and oil's down. Housing's awful and rates are going the wrong way for housing.

Next we are going to hear the whole move was phony, that only a handful of banks -- maybe just JPMorgan (JPM - commentary - Trade Now) and Goldman (GS - commentary - Trade Now) -- can pay back TARP -- and that the banking system is still weak and will remain weak because the recovery will be weak.

Can someone tell me how that conventional wisdom morphs every week, and that when the futures aren't up we have all decided that the money's gone and there is no good news?

I sit here every Monday of the nine up weeks and recognize that "this is the week that all will go awry." Now it is the week before options expiration, which does seem to produce one or two really bad days, huge selloffs. We also have the unholy prospect of health care legislation, which means sell the drugs again, because that's what happens every time we hear "health care reform." Of course health care reform means higher taxes -- bad -- pounding of the me-too drugs where the profits are, and an end to devices and HMOs, which are a tax on the system.

Why the parade of horrible? Because Europe is down, the oil futures are down and the S&P futures are down. Oh, and the profit-takers are here in Apple (AAPL - commentary - Trade Now), something I actually advised myself -- taking off a quarter of a position to ring the register with another quarter taken off tomorrow. Hard to have the PowerShares QQQ Trust (QQQQ - commentary - Trade Now) go up with that trade occurring.

All self-fulfilling. All except one thing -- Mutual Fund Monday. Investors want in, not out. They like weakness to buy. They like strength to buy. They are not dissuaded, and have not been dissuaded by all of these negatives. They are either blithe fools or hapless sheep.

Except they have been winning; the mutual funds have been making money and there's no denying the strength, not with nine out of eleven weeks up.

So, profits and money in, with the latter being the driver the whole time of this rally even though the backdrop has been horrible for months now.

At the time of publication, Cramer was long JPMorgan and Goldman Sachs.

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