Hope Springs Eternal When You Have No Memory

It's incredibly frustrating to be a short-seller, because the market has no memory. The stocks that on a percentage basis are up the most in the financial world are the ones that are the biggest losers in a Gang of Four collapse: Citigroup (C - commentary - Cramer's Take), Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take), and Merrill (MER - commentary - Cramer's Take). These have the most to lose if Ambac (ABK - commentary - Cramer's Take) or MBIA (MBI - commentary - Cramer's Take) or PMI (PMI - commentary - Cramer's Take) or MGIC (MTG - commentary - Cramer's Take) go under.

Yesterday's decline was the real deal, or so we thought. The credit losses if the Gang of Four goes under will overwhelm all the happy talk from Merrill or the ability to keep FNM/FRE's equity from disappearing.

No matter; these stocks are going up on the strong dollar -- totally ephemeral -- and the moronic notion that Merrill's all fat and happy now that the dividend is declared. Why not? They just raised billions in capital. How could it not be? Now let me say, I think that a long Goldman (GS - commentary - Cramer's Take) short Merrill trade makes sense. I don't think that Merrill has that much earnings power. It won't go out of business, but it might not make a lot of money. I say Lehman (LEH - commentary - Cramer's Take) and Morgan (MS - commentary - Cramer's Take) are in similar boats, but I think that Merrill just can't make big numbers, period.

This is a total "hope springs eternal" day. Pulte's (PHM - commentary - Cramer's Take) up, the worst is over. Homebuilders rock! They survived the HGX channel bottom. AIG (AIG - commentary - Cramer's Take)is up -- was it never bad? So what if ABK isn't going to make good, AIG won't need it!! That's how it trades.

Oh, and how about this one: Goldman's up huge and the chart is now great!! I actually agree with that one. (In case you don't think that a lot of this (but not all) is a short squeeze, ask yourself -- who buys Goldman Sachs up 9 when there is no news?) If the bottom is in, then JPMorgan (JPM - commentary - Cramer's Take) was brilliant. Today we believe that there are saviors everywhere and that the saviors are winning, a la Washington Mutual (WM - commentary - Cramer's Take), where everybody who put money in is money good! Makes you want to go buy Sovereign (SOV - commentary - Cramer's Take)! We even like MGIC!

If you are a bear, you are thinking, "Wait, did the market forget what happened with ABK yesterday?" The answer, crazily, is a resounding "Yes!"

Random musings: Retail gets a huge move out of drop in employment claims. I am a seller into any strength of this group. But the "hope springs eternal" crowd loves spring, warm weather, Mother's Day, jobless claims and $600 rebates. ... Still too early to buy ag, let 'em come in. ITT Educational Services (ESI - commentary - Cramer's Take) shows you that when you deliver numbers in a bad cohort, there are a lot of shorts panicking. ... How about that MasterCard (MA - commentary - Cramer's Take) and Visa (V - commentary - Cramer's Take) as ways to play, well, anything! They are totally loved endlessly. ... Phillips-Van Heusen's (PVH - commentary - Cramer's Take) stock says -- at least to me -- go back to VF Corp. (VFC - commentary - Cramer's Take), which did hit the number. ... Apple (AAPL - commentary - Cramer's Take)? Not done. ... Salesforce.com (CRM - commentary - Cramer's Take) is overwhelming the shorts.

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

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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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