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Three Reasons Why Jim Cramer Loves this Bull Market

Jim Cramer is a fan of this market. In fact, on Monday he said that he hadn’t seen conditions like this in 34 years. That’s a pretty strong statement coming from a man that has spent his life in the markets. What is he seeing that has him so bullish? CNBC reported on Monday that he found three key indicators that make him believe in this market.

The Gaps aren’t Filling

Anybody who follows the charts knows that when a stock gaps higher, it will often sell off to fill the gap. This is why traders tend to not buy at the top of the initial gap. Cramer notes that right now, when a stock gaps higher, it continues to the upside without filling the gap. It’s unfamiliar chart action to technical analysts but one that is bullish. Take a look at Williams-Sonoma (NYSE: WSM).

Good News isn’t Selling Off

Wall Street has its fair share of buzz-phrases and “priced to perfection” is definitely one that is overused. Prior to an earnings announcement, traders may accumulate a position in a stock hoping that a blowout earnings announcement will produce a large scale move to the upside on the next trading day.

When this happens, it’s referred to as “priced to perfection.” This means that only a blowout report could move the stock higher. Cramer notes that even so-so earnings reports aren’t spurring the profit taking that traders are used to. In short, it doesn’t take much to impress people these days.

Bad News is Good News

The way it should work is that a bad earnings report should cause a sell-off, especially in a market where traders are sitting on their hands waiting for better entry points. That isn’t happening. Bad news looks like good news.

Cause for Concern?

Warren Buffett would be crying foul. He believes that when people get excited, that’s when the good investors become defensive. Consider reducing positions if you haven’t already but on the hand, don’t become so defensive that you miss the next leg higher if there is one.

[stock-tools exchange="NYSE" symbol="WSM" image_height="180" image_width="300"]

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