Bank of America Is Key Wednesday

Bank of America's (BAC - commentary - Cramer's Take) underwriting will be the crucial test. No, not of the print holding. The thing is enough in the hole that someone might want to own it. But of a return to the free fire-zone shorts, where a gang of shorts can break the print price of the deal (where the stock is priced on the secondary) and then cause a mass panic from all who bought it.

This is the kesselschlacht strategy I have told you about, the battle of annihilation by the shorts of great American companies. I am sure, right now, there short-sellers buying the heck out of credit default swaps, placing big bets on Bank of America getting killed. Tomorrow they will buy all of the October 25, 22.5 and 20 puts they can legally buy, and then Thursday they will start the operation to push the stock down, en masse, simultaneously through the print price. That we could have this sad and horrid confluence is just unbelievable.

As someone who loves the stock market dearly, I can see this playing out in a fashion that simply must be stopped before it happens. I don't know how. But this is the kind of merchandise that can just wreck a tape.

Alternatively, if the stock rallies and holds, we could get a Merrill (MER - commentary - Cramer's Take) situation -- at least before it broke down -- where the print held and the stock rallied. But, of course, that was John Thain's deft use of the anti-short rules. Well, at least Bank of America got the money, unlike Citigroup (C - commentary - Cramer's Take) which, incredibly, never took advantage of the spike after Wachovia (WB - commentary - Cramer's Take) or the rules. Only Fannie Mae (FNM - commentary - Cramer's Take) and Freddie Mac (FRE - commentary - Cramer's Take) were more obstinate.

All day today I fretted about this market. All day today I saw the disruptions, the big prints from the hedge fund belly-ups and the incredibly disconcerting action in Prudential (PRU - commentary - Cramer's Take) and MetLife (MET - commentary - Cramer's Take) and Bank of New York (BK - commentary - Cramer's Take). These are great firms. It means nothing.

You know why I fretted? Because this is the kind of action I saw right before the crash of 1987 when the stock market lost 508 points in one day -- hmm, 508?!

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