Cramer: The Market Has Changed

The very people who so damaged the bank stocks, or who “played it smart” by sitting on the sidelines, are scrambling to go long now that market has gained some sound footing, Cramer said Tuesday. And there’s one sector in particular that the big money is eyeing. So investors should expect this cohort to enjoy a sudden spike in popularity.

That the Dow would give back 115 points the day after gaining nearly 500 is no surprise. Naturally, people would take profits where they could to lock in their gains. But it’s where the money will flow when it reenters the market that’s important. And Cramer said that cash should flood right into the banks.

With Treasury Secretary Geithner announcing his plan to handle banks’ toxic assets, and Federal Reserve Chairman Ben Bernanke all but declaring that not another bank would fail on his watch, the financials are regaining the public’s trust. There’s little talk of nationalization now. The mortgages that weighed so heavily on these institutions’ books are being reworked. The asset-backed paper attached to those mortgages has finally found a viable market in which to trade. Virtually all of the banks’ problems are being solved, and Washington’s steady hand is behind it all.

Now the hedge funds that made billions hammering down bank stocks have to reassess their strategies. And the mutual funds that had taken a timeout to avoid losses are trying to get back in the game. That means some really big money is about to pour into the market, and Cramer thinks Morgan Stanley , Goldman Sachs , JPMorgan Chase , Bank of America , Wells Fargo and even Citigroup will be the most likely recipients.

Neither the hedgies nor the mutuals figured the turn would happen so fast. The hedge funds, in particular, assumed that Geithner would deliver the same horrible performance he did back on Feb 10, when he failed to offer any clear, viable solution to the banking mess. Banks sold off en masse after that. So why would this time be any different? Well, it was different. And Bernanke’s strong presence only added credence to Geithner’s announcement. Now the big money is playing catch-up.

They will catch up, though. And because these guys move the markets, this trend will predominate. So be prepared to fight for shares of any of the aforementioned banks, Cramer said, from now until the end of the quarter.

Cramer's charitable trust owns Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.

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