TheStreet.com TV Recap: Shorts Look to Regroup vs. Subprime

The shorts could be gearing up for another run at the subprime lenders, Jim Cramer said on TheStreet.com TV's Wall St. Confidential Webcast Wednesday.

After those lenders "took the shorts apart" on Tuesday, the shorts won't just sit back and take it, he told Gregg Greenberg, the host of Wall St. Confidential. "It's imperative upon the shorts to start new rumors right now just to be able to claim the rally was a short squeeze.

"That's the way to play it," and it's how Cramer would have played it if he were still at his hedge fund, he said.

Right now, it's "very important" for the shorts to get these stocks back down, he said. What Cramer said he sees happening is a rumor that Wachovia (WB Quote) "will have to spend its dividend" or that Washington Mutual (WM Quote) is in "big trouble." If he were back in the game, he would concentrate on those, he said.

Insurance

Cramer said he loves the insurance sector. He believes Prudential (PRU Quote) and MetLife (MET Quote) are the best in the group, and he owns AIG (AIG Quote) for his charitable trust, Action Alerts PLUS.

Cramer said he's a "little more concerned" about Allstate (ALL Quote), because it's not growing like he would like.