TCM Notes : 5/12/09

• Markets avoided another distribution day as the volume was lower than Friday's session by 20%. While we are now underneath the weekly pivots we remain above the 9dma and 20dma. We did have some bearish engulfing patterns emerge on the indices last Thursday and Friday, but we still have downside support in the moving averages. This week being an options expiration week makes it prone to weakness on the opening Monday (which we saw.) So we'll see how the market handles the low volume weakness going into Tuesday. If selling pressure picks up then we may get geared up for a 38 to 50% retracement of the recent up move. Mr. Market will let us know soon enough what he wants to do.
• Ivar Kreuger is the subject of a new book called "The Match King." I didn't know about him, but apparently he was a master at accounting shenanigans. The stock market crash in 1929 and the depression which ensued blew him up financially. And then he blew himself away. http://en.wikipedia.org/wiki/Ivar_Kreuger
• Meredith Whitney espoused her views on the floor of the NYSE with fellow haggard money honey Maria Bartiromo Monday. At about 2:15pm ct was when she said the banks still had "rotting assets." After that we made lower lows and settled near them at the close. I guess the day she gets long on financials the market will have another 90% up day. Perhaps she'll overstay her welcome on the downside, but while she talks about things being overvalued she's not brave enough to short. So she's telling us what we know already, and giving us nothing actionable except to watch the circus that she's becoming. If there were a stock correlating to her and Dr. Doom I would be short that issue today.
• LFT tested it's 50dma again Monday and bounced to the upside hard to close .06 above it's 9dma. Tuesday's action will be key for this one to see if it's going to make a higher high, or roll over and consolidate into a base. Conversely YTEC has seen a slower more consolidated move. It could be forming a handle now. Buy point is 8.20. A break above that level with volume would signal to me that there is institutional interest again.
• FRE and FNM may need another 92.2 billion by September 30. That's on top of the 78.8B they already took. Talk about winding these down is picking up.
• An interview with Richard Clarida (in the shared items section) echoes my views earlier that the Fed may have to step up their treasury purchases. Investors are once again calling the bluff that the Fed can monetize all the debt coming out of the Treasury. However, investors shouldn't forget they are dealing with an entity that the balance sheet knows no limits. Hence the 9 trillion in off balance sheet items we don't even know about. Since they are trying to get the housing market jump started again any further hikes in the interest of 10 and 30yr notes could make them perhaps double if not triple their 300b of commitments to this space. For now TBT continues to work although it just resisted on it's 200dma. TLT is locked in a downtrend with every average acting as overhead resistance.
• Short interest numbers are out and they did go down some, but not enough to write home about it. NYSE stands at 15.17b and Nasdaq stands at 6.46b. These numbers are from April 30th.
• V : touching back on this one an SMB capital trader notes the 64 - 68 level as a consolidation zone. I didn't realize they had 17$ in cash though. Which is nice. This paperless trend is for real as I use nothing but my debit card to facilitate my purchases. Occasionally it causes a problem.
• SSO and UYG are starting to fall victim to the bearish engulfing pattern. If the 9 and 20dmas can't support the pullback then a retrace to the 86dma could be in the cards. It will be incumbent upon us to be buyers at that level. All this said we still remain in an up channel.
• Pete Najarian seems to think INTC's troubles are AMD's gains. AMD looks to have upside to 5.76 on a weekly chart.