What’s That Giant Sucking Sound?
According to www.trimtabs.com,
nearly $8 billion of newly printed shares (about half of which were convertible
securities) have come to market over the past five days. When you couple that
with only $3.1 billion of new buyback announcements, you get the idea that an
awful lot of liquidity (buying power) has been sucked out of the system, which
is contributing to the market’s mild selloff. As there are additional shares,
converts, etc., hungry to come to the capital markets, as well as the Memorial
Day holiday, I suspect the market could lapse into a holding pattern for the
next couple weeks.
The ugly double whammy of volatility contraction and lack of a catalyst is
sending traders for an early exit ahead of the long holiday weekend. The most
common excuse seems to be, “…if it’s this bad today, why even bother
coming in tomorrow?â€
As we were getting so few indicators pointing either up or down, I thought I’d
highlight four dollar-weighted moves that may bear fruit later in the trading
session:
| Symbol
|
Call
Volume
|
Put
Volume
|
$W
Call Vol
|
$W
Put Vol
|
$W Total Volume
|
| SPX
|
6,760
|
12,851
|
150,441
|
308,507
|
458,948
|
| MSFT
|
27,941
|
23,854
|
83,134
|
177,558
|
260,692
|
| NDX
|
1,120
|
1,252
|
167,110
|
63,140
|
230,250
|
| QQQ
|
44,499
|
32,601
|
130,207
|
95,781
|
225,988
|
| MER
|
9,286
|
3,435
|
130,377
|
38,633
|
169,010
|
| CIEN
|
8,251
|
7,030
|
47,174
|
48,722
|
95,896
|
| QCOM
|
5,522
|
4,255
|
32,346
|
51,528
|
83,874
|
| EMC
|
12,452
|
7,201
|
33,245
|
50,312
|
83,557
|
| IBM
|
6,408
|
9,326
|
38,521
|
44,504
|
83,025
|
| AOL
|
15,017
|
8,738
|
52,125
|
16,602
|
68,727
|
| MNX
|
4,751
|
6,719
|
30,906
|
37,589
|
68,495
|
| INTC
|
26,743
|
8,859
|
42,796
|
22,980
|
65,776
|
| JNPR
|
5,034
|
8,685
|
19,818
|
33,326
|
53,144
|
First, the
NDX, always an institutional favorite for its sheer size per contract,
and the Nasdaq 100
(
QQQ |
Quote |
Chart |
News |
PowerRating), are seeing
more interest on the dollar-weighted call side of the market. Note the NDX’s
almost perfect 1:1 absolute numbers compared to the almost 3:1 dollar-weighted
call action. Clearly, yesterday’s action hasn’t convinced anyone to make any
big bets on a continuation.
Merrill Lynch
(
MER |
Quote |
Chart |
News |
PowerRating) is also seeing a
rather robust 4:1 dollar-weighted flow of money into the calls rather than its
puts. And lastly, even though AOL Time Warner
(
AOL |
Quote |
Chart |
News |
PowerRating)
sold off sharply in the first three hours today, the recent call action suggests
there may be a rebound this afternoon.
(1010WallStreet.com has licensed
the use of Hamzei Analytics proprietary options analytics)