Can a whole market be "squeezed up?" Is that what is happening to the
? So many of you are emailing me and predicting Nasdaq 6000 on the horizon that I have to begin to believe that it won't be the fundamentals that take us there. It will have to be a combination of things, good earnings, continued departure from the
to the Nasdaq and, most important of all, bets that it won't happen by guys who do what I do.
Let's take them one by one. We all know that if the personal computer sector stays hot, if
product transition goes well, if the government relents on
, and if
continues to raise the bar, we have a prescription for higher prices still.
We also know that the S&P and the funds that mimic it are hopelessly behind the Nasdaq this year with the disparity growing, not narrowing. One look at the "Mutual Fund Index" in the
Investors Business Daily
shows you that there are funds up in their 30s -- Nasdaq-levered funds -- and funds in the low single digits --
-levered funds. The money is going to continue to come out of the latter. Of course there is another whole group of funds that is actually down this year, which I think will become simply intolerable for the fund holders when they get their statements at the end of the month. They will bolt to the Nasdaq funds and their adherents, causing still one more wave of money come April shifting from value and S&P into the Nasdaq.
All of those things can take a rocket out of the low atmosphere of the 4000s, but what gets the Nasdaq through the Earth's gravity pull of the Nasdaq 5000s?
I think we are going to need fresh bets made against the market. I think we will need swashbuckling hedge fund managers bent on proving that the public is too bullish to come into the
, that instrument that mimics the
, and short the heck out of them. We need some Biggs-like grumps coming out and calling it a big bubble, so that some of the large, Tiger-like pools of capital buy millions of dollars worth of puts on the NDX, so they can demonstrate their rigor.
Only by getting some wall of worry built where actual cash is bet against this market will we see Nasdaq 6000. The fire and straw coalition of Jim Grant/Ed Yardeni/Barton Biggs/Alan Abelson and like-minded thinkers, however, has been so routed that I just don't think the bears have enough firepower left to lay a trap and then get stuck in it themselves.
That's why, as bullish as I am, I think we won't see Nasdaq 6000 as soon as you would like. The bears are too beaten right now. They need to regroup, re-manifest themselves as the guardians of all reason and high roads, and refortify themselves with authentic fundamental gibberish that demonstrates the wisdom of their ways. Only then, when they are loaded to the gills with Nasdaq puts, which they currently are not, will we have enough liquid oxygen to escape the pull of Nasdaq 5000 and get to 6000.
Unless they change the components of the Index! (LOL.)
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Intel, Microsoft and Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may 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 at