The Biggest Tell: Bank of America

Watch Bank of America (BAC - commentary - Trade Now). This one is the key, not Goldman Sachs (GS - commentary - Trade Now) and not JPMorgan Chase (JPM - commentary - Trade Now) -- which is now back to the offering price -- or Wells Fargo (WFC - commentary - Trade Now), where we got a target bump but might have to do another offering.

Why Bank of America?

Because BAC is the housing cycle and the TARP cycle and the mutual fund cycle -- meaning that if mutual funds get money in, they are going to buy this one because it is way behind the market and it has done its selling of stock.

Why not JPMorgan? I think JPM is going to be more a play on the capital markets, as you are going to see its investment banking and trading be ultra important. Washington Mutual can certainly move the mortgage needle, but I keep thinking back to when Jamie Dimon talked about how, month to month, you could have trading desk swings. That's too hard for me to divine and too hard for others, too. I like JPM as a TARP payback play, as I said yesterday but we know that's certainly in flux.

BAC, on the other hand, is a triple-barreled mortgage play:

1. The mortgage origination network of BAC and Countrywide - 20% to 25% of the country.
2. The mortgage portfolio of Merrill Lynch -- are they really out of that market or are they still sitting on bad paper?
3. The other real-estate-owned business, which is just awful but could be getting better, because pending home sales are getting better and California's getting better.

In short, BAC is the key to one of the most important swing factors of the three key sectors (the troika -- see earlier), and I would have put it up five times on my old quote screen if were back at my old hedge fund.

At the time of publication, Cramer was long GS, JPM and WFC.

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Know What You Own: Other major financial stocks include Citigroup (C - commentary - Trade Now), US Bancorp (USB - commentary - Trade Now), Deutsche Bank (DB - commentary - Trade Now) and Morgan Stanley (MS - commentary - Trade Now).

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