Let Some Damage Be Done

All day Tuesday I pondered what the bears had in their arsenal that could really knock this market down from its overbought perch. Now we know. It's Bank of America (BAC - commentary - Cramer's Take). The question is, "Can BAC be exploited to take the market down?"

So many hedge funds that aren't up for the year and so many mutual funds that have been left behind will have to ponder that question seriously Wednesday. The hedge funds need to come in with guns blazing and hit the ProShares UltraShort Financials (SKF - commentary - Cramer's Take) exchange-traded fund, knowing that can reverberate and no one is going to stand up for individual banks right now, even as Bank of America seems "isolated."

They can now dust off the Nouriel Roubini arguments again and say that Warren Buffett is old news and that this is the beginning of the great "Bear Bank Raid Redux."

But the underinvested mutual funds, and the hedge funds that lean long, have a different agenda. They see this as their chance to get in.

The bears seem stymied at the moment by Europe. When the news of Bank of America's woes first hit the futures dropped double digits. Then they recovered when the European banks, which have been excellent tells of late -- especially Royal Bank of Scotland (RBS - commentary - Cramer's Take) -- rallied!

Perhaps that's because Bank of America is considered isolated, or that if Ken Lewis is fired the government might be forgiving. Or perhaps it's because there is more than enough Troubled Asset Relief Program money to go around and the China stake will raise cash too.

Still I think this can do damage.

I have more respect for what the bears can do in this overbought market. I say stick with Doug Kass's plan from Tuesday: Can't buy 'em here.

Let some damage be done. Then consider joining the underperformers and buy some JPMorgan Chase (JPM - commentary - Cramer's Take) or Goldman Sachs (GS - commentary - Cramer's Take), the two that benefit because they can repay Troubled Asset Relief Program funds because they can raise money without Federal Deposit Insurance Corp. help.

The others that say they can pay it back? Still big hat, no cattle until proven otherwise.

At the time of publication, Cramer was long JPMorgan Chase and Goldman Sachs.

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Know What You Own: Cramer mentioned Bank of America. Other major U.S. banks are Citigroup and Bank of New York Mellon (BK - commentary - Cramer's Take).

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