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Sometimes military analogies work well for the stock market. This is one of those times. I sense a battle of encirclement -- the most dreaded and dangerous gambit in war -- developing among the mutual-fund bulls against the hedge-fund bears.

Here's how the encirclement game gets played and why the stakes are so high when you spot the potential for one. Here's why they were so dreaded on the Eastern front.

Most bears were in intense hibernation over the course of the last six months. No kidding. You may have heard of the "quick and the dead." This stock game was called "short and be dead."

Mind you, I am not talking about the professional short-selling bear; that species is almost as extinct as the panda. Heck, there are not even enough of them to mate.

I am talking about the hedge-fund hybrid bears, the ones who like to play both sides. They will stay long as long as the honey's plentiful. They are Pooh-like. But the moment that the tape turns ugly, these ursas turn grizzly. They can't help themselves. They short with reckless abandon.

This last downturn woke them out of hibernation. It startled them into the options pits where they took down huge numbers of puts on every index. They bought puts on individual stocks. They shorted outright. They went nuts. They were reckless. They coined money. They coined too much money.

And now it looks like they over-reached.

That's where the encirclement campaign comes in. The bulls know the ways of the shorts. Especially the mutual-fund bulls. They can smell the shorts from miles away. They sensed that this downturn lured the bears out of safety in the wide open. The bulls hoarded the cash during the downturn and got a ton more in. No redemption song.

Now the bulls are working furiously to work their way around the bears. They are trying to put the bears into a cauldron, the hottest and most deadly of the encirclements. They bulls are going after the most heavily shorted big-cap tech names. Once they get their positions on, they will tighten the noose and bag the bears because the only way out for the bears, the only breakout possible, is to spread

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nasty rumors and hope they stick. Right now that seems to be failing.

We have seen these games of encirclement from time to time after big downturns. We have seen the trapped bears fade away into oblivion, hapless, rifles surrendered, tanks smashed, after the noose has been tied.

We know that the big mutual funds love these encirclements, especially when the bears are trying to dig in their heels. We know they revel in these games.

We don't know if they have the firepower this time. We don't know how much cash they have. But we know they have the instinct to do this. And we know the bears are out on the plain, totally exposed, with their shorts still on, still hanging out, still being pressed.

Possible encirclement candidates, by the way, include large semiconductor companies and the networkers.

We will be watching.

Random musings:

Earlier in the week I mentioned that DTC, the big clearing firm, was late with reports. I did not check with DTC, but a bunch of my clearing firms were late and they all blamed DTC. DTC says it was not late. It says my clearing firms were wrong. DTC does a great job and I apologize for any wrong impression that I may have caused.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.