The Market Is Simply Ignoring the Facts

So much is happening that shouldn't be happening. Recounting the list might help explain why the market has a hard time going down.

First, take credit card charge-offs. As unemployment grows, we should have expanded credit charge-offs. That's a total given. It is inconceivable not to have bigger charge-offs. No model I know of says this should be happening. But yesterday American Express (AXP - commentary - Trade Now) joined Capital One (COF - commentary - Trade Now) and Target (TGT - commentary - Trade Now) reporting that charge-offs are diminishing. These companies are not lying. It is happening. Credit card charge-offs are major hot buttons for short-sellers who, using the same models I would, expected the exact opposite to happen. Especially when Ken Chenault, CEO of American Express, was so downbeat when he spoke to Erin Burnett last month on CNBC.

Second, if foreclosures are running so high and we have seen unbelievably large numbers of late -- as well as reports (including one from Deutsche Bank yesterday) that said more than 40% of mortgages are underwater -- why is inventory going down?. Shouldn't it be going UP? In the end, inventory controls price in a flat-interest-rate environment, and there's no way we should be seeing the homebuilders going up. Obviously they are.

Then there are the issues related to autos. We are hearing some remarkable numbers, maybe a 30% increase in auto sales off the bottom -- that's 3 million cars -- with the Cars for Clunkers program cited for the big spurt. This one's a total absurdity. This program will spur nowhere near that build or those sales. How did inventories get so lean? Because sales were terrible. Why were sales terrible? Because of unemployment. Just seems so counterintuitive, but tell the owners of Johnson Controls (JCI - commentary - Trade Now), TRW (TRW - commentary - Trade Now), Borg Warner (BWA - commentary - Trade Now) and American Axle (AXL - commentary - Trade Now) owners. They got it right. So, it seems, have the AK Steel (AKS - commentary - Trade Now) and Alcoa (AA - commentary - Trade Now) buyers.

The wildest ones though, the ones that totally confuse me, are the companies that insure mortgage bonds and mortgages -- MBIA (MBI - commentary - Trade Now), MGIC (MTG - commentary - Trade Now) and Radian (RDN - commentary - Trade Now). These companies have doubled and doubled and doubled again ... on what? On accounting gains? On cancellations of payments? Surely it can't be on homes they insured that have come back to life, because we know the foreclosures are skyrocketing. How can these insurers not be losing money hand over fist? How can their stocks be going up if they insured paper that everyone has either written off or down? What gives? I haven't heard an honest explanation yet.

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Jim Cramer is co-founder and chairman 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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