TCM Notes : 4/23/09

• End of day reversal for SP500 resulted in a higher volume distribution day number 3. 5 to 6 of these and we have a problem.
• Mish pointed out an important fact that will go overlooked perhaps up until May 4. THEY ARE LYING TO YOU. Government? Lie? Never! So the leaks will start in earnest on Friday. Look for more catch words, fantastic rumors, and creative headlines in the trade rags and on the tube. I think the Fed along with their largest depositors (the big 19) are about to go on a government approved acquisition spree. The regional players that are weak are about to become very vulnerable. If they are not forced into a deal with a larger bank then they will certainly be diluting the current shareholder base on an equity raise. In Mish's piece (found in the reader on the right) a simulated test using potentially low end metrics produced 56% reduction in Tier 1 capital. Dilution to follow....again. Good thing that yield curve keeps steepening. They need all the net interest margin they can get. http://globaleconomicanalysis.blogspot.com/2009/04/leaking-and-reeking-of-stress.html
• Tech has most cash and least borrowing relative to total assets among 10 industries.
• AKAM calls are in play....stock is above 200dma,86,50,20,and 9. It broke out on high volume back in February.
• ANR has call activity and rumors around it. Tightening up on a daily, but the weekly needs to clear 22.16$ to get anything really going. ANR and CLF were trying to do a deal last year early on before everything turned south.
• 15% cash to market cap was a ratio I heard thrown out on the SP500.
• Proshares is rolling out 3x beta products now. Seeking approval on 27 new ones. There was a good piece on how these leveraged products are influencing the last 10 minutes of trading as swaps have to be balanced into the close. As usual preferred clients get the nod first on what's out of balance and front run the individual stocks the etfs are comprised of. If you think that sort of thing doesn't happen every second of the day you should leave now while you still have your shirt! The piece went on to say on trending days going into the close there will always be one massive final push to a closing high or low.....depending on the trend for the day. That strategy is a little tougher on a chop day like yesterday, but the signs were there going into the close as the re balance took place to the downside. And what usually happens is a gap in the opposite direction the following open.
• STAR has a roe of 24%, 1.17 cash flow, 0 debt, 57% management ownership, and probably has legs to 21 in the short term. EPS numbers on this one have been and continue to look strong going forward. Shares have doubled since November, and it's on the IBD screens. So be aware of the crowd.
• LPX is seeing call bets that it will be at 5$ by mid June. I'm thinking since HD is looking better there may be logical reasoning for this play. Next thing you know I'll be saying XHB is breaking out on a daily and weekly chart. It is? Damn. Now I've gone and done it! HD is at resistance here at 26 on a weekly via the 86dma. XHB has another 1 to 1.5$ to the upside before serious resistance on a daily and weekly. LPX looks like clear sailing to 4.62 - 5.50 range.
• LFT continues to move higher since mentioned. YTEC could be interesting if money rolls out of LFT and goes towards YTEC. Last time Yucheng had heavy upside volume was during the final throes of the bull market 2007. It doubled so fast....perhaps a redeux is in order. Depending on how it finishes out the week, it could be a candidate for a 3 weeks tight pattern. With the 9dma looking to cross over the 20dma it could be a powerful set up.