Rallying on the Bear's Back

The bears over-reached again. Incredible. Armed with the exclusive Goldman Sachs call that we were going to have a downer GDP, the bears certainly seemed confident enough yesterday to press their bets. We see their pawprints everywhere.

It looks like whoever was locking into the gains at the end of the month or the end of the mutual fund fiscal year may have completed. The sellers were all over the place. The VIX, which has plummeted 10%, may be the real tell that the sellers have finished.

The most encouraging thing I have seen today is the four key stocks -- Apple (AAPL - commentary - Trade Now), Google (GOOG - commentary - Trade Now), JPMorgan Chase (JPM - commentary - Trade Now) and Goldman Sachs (GS - commentary - Trade Now) -- have at last reversed. I like them all here and would still be a buyer.

I want to be very clear. The combination of sellers who locked in and finished, coupled with the need to mark up for those who are underperforming and the short-sellers who thought they had real ammo to talk double-dip, is producing this rally. All three want to either get out of the way of the seasonably strong months of November and December or play them.

The heaviest short positions I know right now are in Bank of America (BAC - commentary - Trade Now) and Wells Fargo (WFC - commentary - Trade Now), betting that these two will be ordered to do secondaries by the government and that they are so heavy anyway.

Wells is still being weighed on by the Dick Bove downgrade. That's probably the next stock to move if this move is real. You want more than a one-day rally Wells Fargo will tell the tale.

Random musings: You know I am a huge believer in the natural gas trade. I am going to University of Oklahoma tomorrow to explore the theme. Today the $5 level seems solid, so the stocks should go higher, sending the stocks back up to near their highs, where they should be based on that price level.

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

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