You can see how the S&P would struggle to go higher in aggregate as these tech stocks deflated. On a chart it looks like the Nasdaq brought down the S&P 500, in keeping with the current fear-mongering I hear all over the place. In reality, a close reading of the individual charts says this doomsday view does not hold up to close scrutiny. The beheadings of the overvalued techs in the S&P 500 created more losses than what the rest of the market could absorb, so the S&P ultimately went lower.

But if you analyze the breakdown, you will see that what was happening underneath is precisely what is happening now: tremendous gains in utilities, consumer-goods stocks, drug companies and classic growth stocks that had nothing to do with tech.

And while the averages are currently hitting all-time highs, understand -- as I will show later -- that the valuations are pretty tame. Interestingly, the largest price-to-earnings-multiple stretches as a function of growth rate are coming from the utilities and the real estate investment trusts. In fact, if you want a bubble, look no further than these stocks, as they are simply part and parcel with the real worldwide bubble -- the bubble in the global bond markets. They are a function of the 10-year U.S. Treasury threatening to break through a 2.5% yield at all times. But that's for another article.

Still, I recognize the pain in the market, and I want to attack it and show you what I think is really going on. You see, I do not believe the market is undergoing a crisis that will end with the collapse of companies worth hundreds of billions of dollars, as in 2000. We are simply struggling with how to value the stocks that had been the market leaders before the market changed its coloration at the end of February -- a shift came with the pirouette in Salesforce.com (CRM). After the company reported a fabulous quarter, better than what all analysts were expecting, the stock hit an all-time high in after-hours trading and then belly-flopped the next day. That was the beginning of a swoon that has taken the bellwether stock of the group from $66 to $50, with no real sign of bottoming on the horizon.

Until that reversal, the momentum bulls had felt they would be rewarded continually if they owned stocks with tremendous sales momentum. It had worked ever since the great slowdown in the economy, and there was no reason to believe it was going to stop working.

But it did stop working, and that's still the case today. If the best tech company in the hottest area of tech -- cloud-based software-as-a-service -- gives you spectacular growth and the stock fails to go higher, what does that mean for the less than stellar, less profitable firm? Well, we seem to find out the answer to that daily, don't we?

Stay tuned for part two, which will appear later on today on Real Money.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, had no positions in the securities mentioned.

Editor's Note: This article was originally published at 8:45 a.m. EST on Real Money on May 12.

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