Bad News Finally Looks Priced In

If you stop redemptions as a hedge fund, a la Fortress Investment Group (FIG - commentary - Cramer's Take), and you don't go down after really blowing up, a la DuPont (DD - commentary - Cramer's Take), you can craft an argument that the bad news is finally in the stocks and that the automatic selling that we have seen endlessly from the hedge funds is at last behind us.

And it is not just DuPont. Nokia (NOK - commentary - Cramer's Take) rallies as we find that the news is grim but not as grim as we thought. Research In Motion (RIMM - commentary - Cramer's Take) should be on its second bad day or at least give up its gain from yesterday because of number cuts, but that's not happening either. Merck (MRK - commentary - Cramer's Take) is barely down on a disappointing cut, so what does that say about Johnson & Johnson (JNJ - commentary - Cramer's Take) or Pfizer (PFE - commentary - Cramer's Take)? It says buy. The retailers got through dismal numbers and have gone higher; is the worst over? Buy Macy's (M - commentary - Cramer's Take).

Given that we have very few bulls, according to the Investors Intelligence survey, then it would seem that a lot of people are out of position if they don't own stocks. You staunch the supply/demand with an unbelievable and to me unethical halting of redemptions, and you take away the earnings risk, you get a "better" feel. That's what we see today.

Now, is there anything substantive behind the rally, meaning, is anything really better?

The answer is that there are substantive programs and a lowering of interest rates that are going to produce a better housing market -- hence why people are buying the Housing Sector Index (HGX - commentary - Cramer's Take) and Home Depot (HD - commentary - Cramer's Take) and Lowe's (LOW - commentary - Cramer's Take) and, yes, the most hated company on earth, Sears Holdings (SHLD - commentary - Cramer's Take). It simply can't be as bad as last year.

And we have something else: Lower earnings estimates that at last can be beaten, because we have a tad better consumer environment.

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