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Cramer Defends Stock Market Rally, Tells Pessimists to Pipe Down
11 Apr 2012 EDT - CNBC.com

Stocks took a turn higher on Wall Street Wednesday, following a five-day string of sharp declines. All the major averages finished off of their intraday highs but were still up by almost 1 percent on the session.

Despite what some skeptics say, " Mad Money " host Jim Cramer defended the market rally and chastised the media, hedge funds and brokerage firms for always putting such a negative spin on the news.

"Have you ever noticed that when stocks go down, we accept that the decline makes a ton of sense but when stocks go higher, we seem to come up with a negative reason why they shouldn't?" he asked.

"We need to unmask this misdirection, because it keeps you from making money and often forces your hand into selling by convincing you that what's good is actually bad."

Cramer cited paint company Sherwin Williams as a prime example of this bizarre dichotomy of rational drops but irrational pops. Investors were shocked, he said, when SHW raised its first-quarter outlook and boasted a revenue jump of 20 percent, simply because they thought a weak housing market would have pushed those numbers down.

It must be the warm weather, they said.

And with that, the skeptics went to work and the stock slid, dropping from $112 to $109.

But as the managers at SHW explained, most of the paint being sold was for interior, not exterior use. The fact was, people sold when they should have been buying, Cramer said.

"This kind of stuff infuriates me because it's entirely possible for skepticism to morph into cynicism, if not outright nihilism," he said, "where the facts mean nothing and the only thing that matter is the ability to interpret them negatively."

Cramer said this type of misguided logic is especially apparent among apparel companies and retailers. "I hear over and over again that sales have been aided by warmer weather and that they would have been much lower if the winter hadn't been unseasonably warm." He said investors simply can't believe in the potentially strong pent-up demand for products.

Sometimes, the merchandise just sells well. "It happens," he said. "Companies can do well. Many people thought PVH was borrowing from spring sales with its terrific January, but then business improved in February and got better still in March!"

And Cramer said this mindset isn't restricted to retail. Alcoa and Owens-Illinois both reported terrific quarterly sales and earnings, but analysts are still in denial. He added that what they should be doing is focusing on the decreasing raw costs, rising glass demand and the dramatic rise in aluminum demand used in cars and in aircraft.

"Healthy skepticism of success makes sense," he said. "But there is such a thing as unhealthy skepticism and we see it every day in this business."

The bottom line: Cramer said that sometimes, when stocks go up, they deserve to go up and not because buyers don't know what they're doing.

"Business conditions can improve, strategies can get more focused, execution can get better and, most importantly, demand can get stronger," he said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

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