He uses chart analysis from Dan Fitzpatrick so its backed my more then just his crazy ideas. Fitzpatrick even thinks a move to 1,272 is very possible. See below for the video and his 6 reasons to back up the chart:
Cramer is taking a deep dive into a graphic representation of where the market can go, courtesy of Dan Fitzpatrick of RealMoney.com. The technicals point to a "head and shoulders" pattern and just about any way you look at these charts, the S&P looks to go to 1200. Based on the furthest distance from its 200-day moving average, Fitzpatrick also thinks the S&P could go to 1272, which is a 24% move. And at a minimum he believes chartists will start seeing 1200 as the level where they call a top in the S&P, which is over 17% higher than where we are right now.
First: Takeovers. In one of the most traditionally unactive times of the year - the week before Labor Day - there were no fewer than four major takeovers and takeover attempts. This is extremely notable, as Cramer points out that these kind of deals don't happen unless stocks are cheaper, not more expensive than we think.
Second: Money in. The market has been flooded with money coming in from the sidelines as people are beginning to move away from the outpouring of capital from the markets that started with Lehman Brothers. Cramer points out that this will result in better year-over-year earnings comparisons, which will energize the public to put more money into the market.
Third: Leadership is broadening. The market needs generals, says Cramer, who reminds that this rally started six months ago with oil, techs and banks leading the way. Now we have health care and transports that are picking up, along with confirmation that worldwide economic activity is picking up, thanks to positive numbers from freight and packaging companies. "This kind of broad-based leadership is a huge positive," says Cramer.
Fourth: The firings have stopped. Although hiring hasn't necessarily picked up, the last few unemployment numbers show that most of the people who are going to be laid off have already been laid off. Cramer sees this as a prelude to a new wave of economic growth and that the recovery may not be as jobless as everyone thinks.
Fifth: The housing bottom. Cramer continues to see confirmation that his call of the June 30th bottom was right on target, as existing home sales, new home sales, permits and pending sales all bottomed this summer. He also points out that other real estate owned by banks is also stabilizing and any losses will remain contained. This is confirmed by the fact that commercial real estate stocks and real estate investment trusts are all currently on the upswing and the "impending" commercial real estate collapse may no be as certain as some people are making it out to be.
Sixth and last: the combination of lowering credit card losses and positive retail numbers. Places as diverse as Tiffany [TIF 37.43 0.42 (+1.13%) ], Coach [COH 30.835 0.415 (+1.36%) ] and Williams Sonoma [WSM 19.02 -0.12 (-0.63%) ] as well as Kohl’s [KSS 56.20 0.62 (+1.12%) ], Aeropostale [ARO 42.02 0.25 (+0.6%) ], Jones Apparel [JNY 16.31 0.72 (+4.62%) ] and Gap [GPS 21.70 0.10 (+0.46%) ] have all shown that back to school was a success. The back-to-school season was not as bad as many people had made it out to be, so these stocks have also been relatively and significantly depressed.