TCM Notes : 4/21/09

• Well that comment on "loan to common equity conversion" caused the bid side of the market to dry up yesterday. While it seemed like a distribution day NYSE volume was lower than Friday's session. The Nasdaq as well skirted a distribution day yesterday. How? Volume was clearly higher than Friday's and Nasdaq was off 3.88%, so how does that not qualify. IBD points out you need to remove the excess volume seen in ORCL and JAVA. Once that is adjusted back to average volumes then Nasdaq volume comes in lower than Friday's. Which leads me to.......
• ORCL / JAVA for 7.4b or 9.50 cash. What is Larry doing? Bailing KKR out of a stupid investment? Some may think the candle formed Monday in ORCL is bullish. I beg to differ and if 17.45 is violated a short to 15.25 could be warranted. This deal somewhat explains the double topping action recently seen on a daily at exactly 19.45. Perhaps some folks knew a deal was imminent? Nah. That type of stuff doesn't happen on Wall St.
• The FAS/FAZ featured last Thursday at about $9 each has seen that spread blow out as of today. Equal dollars were deployed and equal amounts of shares were achieved. This one will be interesting to monitor because we will get to see the negative compounding workout on these. Now that FAZ is above 11 and FAS below 7 this could get interesting on 10-30% days. Target is 40 for either one.
• DNDN had a blowout move on provenge news last week. There is still short covering happening at these levels, so those buying up here are in for a rude awakening when that pressure subsides. Analyst fluff could keep it buoyed, but chances are their firm's trading desk is selling upside calls and buying a put spread. They wouldn't! Oh, but they would! 9dma is at 14 stock is at 19.52.....that's a time stretch if ever there was one. And they are aways off until they have trial data. I don't do drug companies because of the headline risk involved. You can get rich or blow up just like that. Perhaps that's a foolish view, but doing this for awhile now I've seen a few of these things. They are literally lottery tickets.
• A new etf focusing on convertible bonds is available now. CWB. Consists of BAA3/BA1 rated bonds. The pitch is it offers the safety of bonds with the potential gains of a stock. The thing is if it saw many defaults, or some other factors the holdings may never convert. Again with these new issues. I like to see some interest develop through increased volumes, then moving average development, and ultimately a chart pattern. Only then can I measure risk/reward on these ideas. As of the moment it's just an idea. Only the market can tell if it's a valid idea.
• Seems my prediction of the IMF becoming the Fed of the world is gaining acceptance everyday. If you'll recall the Fed's balance sheet was 800b going into the crisis. Now it's over 2 Trillion. G20 decided to give the IMF an "allocation" of 750b! Taking their funny money is still seen internationally as extreme weakness since they are the global lender of last resort. Folks don't know about the Fed enough to wrap their heads around it though. Just know their agenda is not aligned with yours. More than likely they will be a seller of gold. http://en.wikipedia.org/wiki/International_Monetary_Fund
• Speak of the devil : http://www.cnbc.com//id/30319965