The Market Ticker

Well well well, do we have indecision here or what?

Here's my favorite chart again!



Amusing - we once again poked up above the upper line, then back down it came, closing with the top of the candle right on it. It doesn't get any more obvious than that folks - nor does it get any more obvious that the wedge is running out of room!

By this week the range will be down to literally a couple of points - I don't see how it can continue here. If you look at the other indicators it looks like things are getting tired after the last few days... the ADX in particular shows marks of an overhang in buying,. which could easily reverse in the next couple of days.

Now can this power through? Well, I suppose anything is possible. But c'mon guys - the overbought ratio here is totally obscene, and the momentum is lacking. Present, yes - but lacking.

Anyway, I'm still not sold, especially given the trading pattern here. This market just feels heavy. AA was really the only standout here in the DOW today - without it we'd not be in such good shape.

And before Kudlow (well, his hack this time as he's off today) lies again - the Transports were down today and on stochastics posted a SELL, with the fast 11 points under the slow. Check it yourself. (Note - the "sell" is unconfirmed by the MACD - so far.)

What else is up? A bunch of stuff. Let's go through it.

First up, this afternoon we had a report on Consumer Borrowing - this was a very negative report. Borrowing was way up. But wait? How'd they do that?

"Use of revolving credit, primarily credit cards, rose at a sizzling pace of 9.2 percent. That was up from a 2.9 percent growth rate in February and was the biggest increase since November."

That's a big number, and once all the numbers get burned off your plastic, you're screwed. The Home ATM machine is closed, so what's that leave? Credit cards! When the consumer hits the wall, that's that. End of discussion.

It will be interesting to see what the retail sales numbers look like. If they bite, then its "look out below!" If not, the party might go on for another month. But eventually, revolving credit hits a hard wall, and that wall is far more inelastic than the "Home Refinance ATM" one is.

Then there's this ditty from Seeking Alpha, pointing out pretty much what I've been saying - don't be the last guy up when the music stops.....

And of course we have gas prices, right? Who can forget that...... over $3 a gallon on the national average. Oi.

Now let's look at something else odd..... today someone wrote nearly 80,000 in-the-money CALLs on IndyMac bank (IMB) - on the $25.00 strike - for May. That is 8 million shares worth! There were only 5900 contracts open before today - that was a new opening position.

Now if you just wanted the stock, you'd buy it. If you wanted to lock your profit on 8 million shares, you might do this - you get the price today ($31.43), irrespective of declines.

But if you though the price was going higher you'd be insane to do this, because you will not make another nickel on a further advance.

So this is either (1) someone making a really big bet that the stock is going in the dump (by more than $6.50 from today's price), or (2) someone who holds a shizload of stock who is afraid that the stock is going in the dump and wants to be damn sure to lock their profit.

Oh, and I almost forgot - those options expire in less than two weeks.

My guess is that someone thinks that this company is going to have a very, very serious problem within the next two weeks. Is this somehow connected to a larger market issue?

There is the possibility that this is some sort of glitch. But I wouldn't bet on it. Its showing up in multiple places....... and by the way, this same sort of "odd" pattern showed up in AHM's options just a couple of days before the hammer fell on them - BIGTIME.

Now let's add something else. Look at the VIX - 10,000 calls purchased today on the 17 strike. Those are insanely out of the money. They were purchased too - the trades went through on the ASK! Its not a lot of money in terms of the size of the bet - at 15 cents 10,000 contracts doesn't cost a huge amount of money - but guys - this is an absolutely enormous deal. Again, I can't be sure if this will "stick" (and there are a LOT of these open) but once again with only a couple of weeks left...... you can bet I'll be watching that one and will update whether or not they "stuck" in the morning.

Its tough to know - but given the market's action lately, I wouldn't be surprised to see some really ugly general market action in the next two weeks. Mainland China's market, which has been closed for a week, re-opens tonight. It will be interesting to see how they will digest the obvious dichotomy of our economy inexorably slowing, while at the same time stocks have been grinding higher over here while they were sitting on their hands for the May Day holidays.

Never mind that this is the longest continual "up" streak for the Dow since........ naw, you don't want me to tell you... but I suspect you know.

I remain loaded in cash, waiting for somewhere useful to put the money to work. I've been nibbling on some cheap PUTs here and there, but its all little money - couple hundred here, couple hundred there - and only when I find something that looks horribly underpriced.

Today looks to open pretty much flat, even with the Alcoa bid for Alcan in the headlines. The Dow will certainly get a bit of a lift, but the S&P and Nasdaq appear to be flat.

There's nothing really happening - Asia opened very strong but closed with a bit of color on the page, although the Nikkie and Shanghi indices were very strong. Followthrough or leadership? Hmmm....

Treasury refunding starts today, which may add a bit of volatility to the bond market. This is the last auction for the 3 year, which the Treasury is withdrawing from the market. Their claim is that its not needed given the lower deficit.

Everyone seems to be sitting on their hands waiting for the Fed decision coming this week on interest rates. It is essentially a given that the discount rate will remain unchanged; the question becomes is there a bias and, if so, which way.

Nothing of note happened over the weekend. The premise I am working off of remains the same; the wedges will be my guide today, waiting to see if there is any sort of significant move above or below before I commit the cash. It feels like the calm before the storm.... now the question is, do we get a nice May Shower, or a Cat 5 Hurricane?

Good trading to you!

PS: We've all heard the old saw about "don't try to catch a falling knife." I saw a new one this morning that's even better - "don't try to catch falling pianos." While its not true yet - it may be soon.