Take Advantage of Market's Innate Strength - TheStreet

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Bears have to take note of the action here. Volume may have been light Monday, but the breadth, as noted by the new highs, was incredibly impressive. Three hundred and twenty-two stocks hit new highs on the

New York Stock Exchange

and 241 were so anointed on the



Not only that, but you had breakout earnings from

Knight Trading


. When you have the likes of


( SCH) and Knight Trading and


(ET) - Get Report



(AMTD) - Get Report

breaking out here, you have to be blown away by the strength.

Yet the market still doesn't get nearly the respect I would expect it to get at this stage of the game. When it goes higher, it gets featured as "speculative" buying. When the


hits new highs, we focus on the outrageous valuations, even though 21 times earnings may turn out to be a steal if the economy gets as strong as I think it will.

I think it is time to accept that the three-year bear market has ingrained a level of skepticism that is entirely too damning to too many stocks. Yes, I know, it is painful for the intelligentsia out there to have to cover


(AMZN) - Get Report

at $53, and I am mindful that owning



at $40 seems nuts, especially because I sold it at $30.

But away from the stretched Net valuations, there are plenty of stocks that seem downright cheap if the economy expands. And there are a lot of other stocks that are like


( MOT); with a swift kick of an executive, you get a 35% gain.

I know it will get harder as we approach

Dow 10,000 to stay in the game. You no doubt will have to deal with


(EBAY) - Get Report

at $65 -- I know, I should buy it for my

Action Alerts PLUS portfolio, but I am sticking by


valuation parameters even though others obviously aren't -- and Amazon at $60.

But I urge you to look away from the dot-coms and acknowledge that there are hundreds of other stocks hitting new highs that aren't stretched. Is E*Trade stretched here if the individual investor rebounds slightly? Is

Morgan Stanley

( MWD) stretched here if the stock market can handle some IPOs? Is

Goldman Sachs

(GS) - Get Report

stretched if the mergers and acquisitions market comes back?

I don't think so.

Or consider

J.P. Morgan

(JPM) - Get Report

. Here's a stock that is getting talked about as being in the market to take someone over, even though I can tell you that isn't going to happen for a year or two. In the meantime, it remains dirt-cheap, as do


(C) - Get Report



( FBF).


(WB) - Get Report


Bank One

(ONE) - Get Report

are similarly as cheap. If Arnold Schwarzenegger gets into the California governor's office, I wouldn't be surprised to see

Bank of America

(BAC) - Get Report

hit new highs despite the mutual fund scandal.

Papers and chemicals are priced too cheaply given the expansion. The drug stocks are priced as if price controls were a given, but I doubt that can happen. The defense stocks are priced as if we were going to cut defense spending but that seems like an impossibility if we are going to continue to battle terrorism overseas. Don't forget that the retailers are priced as if rates were about to shoot up, yet the bond market remains pretty subdued.

Look, I am not so bullish as to tell you that I want to buy


(F) - Get Report



(AMD) - Get Report



(BAX) - Get Report

, to mention three companies that I think are poorly managed. But I am so bullish as to be ready to take advantage of the dips that the market keeps giving us. A week ago,


had a write-up of E*Trade as an especially good buy. It came on the same day that


cut brokerage rates. I bought some E*Trade 10% ago, in what seemed like an easy giveaway. It turned out to be exactly that.

I had hoped that mutual fund selling would continue this week, but you know from my

mea culpa that I no longer think that's the case. Now I am just hoping for pockets of weakness in individual stocks to let me in, pockets like the downgrade of


(DISH) - Get Report

by someone who doesn't understand that now this company is favored because of the dynamic of the ESPN-Fox Sports wars. Or, last week, when


( NXTL) traded down almost to $18 because someone was worried about


(VZ) - Get Report

wireless and someone else was worried about the push-to-talk competition. Yawn.

So let's understand that this market has some innate strength, that it has shrugged off a huge number of negatives, not the least of which was a potential for global war in the Middle East, and it keeps going higher.

Tough to bet against, that's for certain.

At the time of publication, Cramer was long E*Trade, J.P. Morgan, FleetBoston, EchoStar and Nextel.

James J. 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.

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