Taking the Bears to the Cleaners

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The Greenspan rally. Ho-hum. Sure, that explains 180 points of the 380-point gain. This article will explain the rest.

For weeks, short-sellers have been coining money. Why not? The world was supposed to come to an end sometime this week, so why not stay short? You could at least count on the sky falling, allowing for some good covering along the way.

But markets rarely allow you to cover into strength. That's why Friday was the bottom. The moment of maximum fear was Friday, with

General Electric

(GE) - Get Report

acting like it would preannounce bad earnings after the close and

American Express

(AXP) - Get Report

acting like Indonesian Express, and

America Online

(AOL)

pretending to be Venezuela Online.

Unless you covered your shorts at the point of maximum pain for the bulls, you just couldn't get in. You never can. As I

described last week, 10 years ago I came in short after Labor Day and felt like I lived through the spin cycle on one of those giant

Maytags

(MYG)

at the laundromat. Washed and folded.

So, if you stayed short -- and the "smart money" stayed short through Greenspan -- you probably pressed your bet when the

Dow

"only" went up 180 and the talking heads were decrying this rally as a "bad" rally. And why not stay short? Every afternoon, like clockwork, the margin clerks spew out notices that Joe Blow hedge fund must either put up collateral or get sold out. It was only a matter of time before those margin calls got issued again. Every afternoon the rumormongers spread the word that some big bank had sold puts against the market and couldn't bring them in. Every afternoon we had some talking head come in and bash the market.

Hmmm. Wrong. Didn't happen. Market stayed up, so there were no margin calls. No hapless, miserable forced sellers to shoot against. The banks that sold puts, they could recover them today for small losses. The humongo multibillion-dollar loss after the close? Turned out to be

Merrill Lynch

(MER)

announcing a pretty small charge and possible layoffs: a belt tightening!

And the time to cover the short was past.

The dizzying hot Maytag spin cycle. Flopping up and down with the whites. Shrinking with the khakis. Praying to be sloughed off into the lint filter but too big to ever land there.

Oh yeah, we are going to have to hear from

Kenneth Starr

soon. I am sure the president did stuff that will make it so I can't watch the news with my kids, but I haven't been able to do that since this story broke. (I can't even analogize this stuff to

Wild Discovery

because the animals are better behaved!)

But it ain't gonna do squat to

Bristol-Myers Squibb

(BMY) - Get Report

and it won't bring back to life those SPX puts and all of Merrill some poor slob shorted at 63.

In other words, the last 200 points were caused by people

not

having to sell. That is different from pure short-covering, which is what we had a couple of weeks ago in a phony rally. The absence of selling at this point will breed buyers as sure as a train pulling out of a station breeds people trying to hop on.

Yeah, those naggin' fundamentals. I don't know. We sat down with a half-dozen major league tech companies and didn't hear anything bad. Get this, in a couple of cases we heard good things. Isn't that a hoot?

Of course, tomorrow could bring bad news from Japan or Brazil or Argentina or Uruguay or Mexico or Russia or Indonesia or Thailand. But what if it doesn't?

We go higher.

More quarters, please. More spin cycles. Pressed. Permanently.

James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com

. At the time of publication, the fund was long General Electric, American Express, Bristol-Myers Squibb, America Online and Merrill Lynch, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column by sending a letter to TheStreet.com at

letters@thestreet.com.