Cramer: A Colossal Market Hiccup Is Coming

We saw this yesterday where we saw covering in Open Table(OPEN) and Netflix and Green Mountain. These are wide open, everyone-knows-they-are-shorts positions, but they got crowded and the smart money didn't want to be greedy and brought them in. Meanwhile, the wacky Success Factors(SFSF) deal made the cloud plays, which had been free-fire-zone shorts, into classic longs. Here I mean Tibco(TIBX), Citrix(CTXS), Salesforce.com(CRM) and then silly little stocks like Kenexa(KNXA), a Success Factors analogue that I am sure someone was diligently shorting until yesterday.

Meanwhile, the pressure is so on to find beaten-down names that could rally -- that's the financials because they are shorted -- where short busters come in and take them up.

And, of course, the easy retail names that were supposed to do poorly after Tiffany(TIF) -- think Ralph Lauren(RL) and PVH(PVH) -- don't come in at all and Tiffany is revealed as a false tell.

Don't forget the oils, which are now viewed as being indestructible because China is coming back online vs. two weeks ago, where you could push it down with a feather.

All of these forces are coalescing to take apart the shorts, which have to scramble until there are none left.

This is such a time-honored pattern in this market that I am surprised there isn't a short-busters triple ETF by now, an amalgam of a high-energy, highly-toxic market of bad stocks -- not just risk on but crummy risk on -- that can be used just to bash the shorts until they are no more.

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So, be prepared. You saw it last night when the S&P 500 was comfortably down, courtesy Europe, particularly Germany, and then rallied. And then the FXE moves sharply higher, the best tell of all, Germany turned around and another day where the shorts can't keep it together begins.

Do not forget that the market is thin enough, and the double and triple ETFs powerful enough, that without a raid on a particular European bank (very hard now that Bernanke's in there) and if the averages are up at 3:15 pm, they will double what they are up at 3:50. Of course, with the fee-hungry creators of ETFs arguing that they have nothing to do with it, because, alas, why not? Why argue that they do?