Dalglish, returning to the club he managed for 18 months up to August 1998, admitted his Newcastle counterpart Pardew has worked miracles.
He said: "They had the problem of the African Nations Cup when they lost Ba and Tiote.
"Plus the injuries and suspensions everyone picks up throughout a season, so Alan has done really well and that is reflected in the position they are in.
"They went out of the two cups relatively early so they only had the league to concentrate on and I think that will have helped them as well. I never predicted anything for them, but they have done excellent so far."