Everything was going along all nice and peachy until....



What was that?! Does someone know something about the CPI number due out tomorrow? That pop was pretty interesting. Or was it the Fed's survey on lending standards which came out around that time?

Not sure... but the selloff was big, it was certain, and it, with the exception of the DOW, drove everything into the red where it stayed - especially the Nasdaq, which was punished for 0.6% on the close.

Both WalMart and Home Depot report tomorrow morning, along with the CPI number.

And here's our friend....



Ping! Right up into the channel with that pin, and right back down. Called a "spinning top" in chart parlance, it shows indecision between bulls and bears. Well duh, says I.

I was chortling a bit as CNBC tried to spin this one. It wasn't a big deal, then it was, then it wasn't again. Discount it all based on the Fed's remarks on lending.

Well ok, that might be true. But was that limited to mortgages? No, it was not!

Do you see much in the way of reporting on this? No. And that is curious - because the announced news was that lending has been tightened across the spectrum, from mortgages to corporate credit to consumer loans.

Is the sphincter starting to squeeze on the credit markets? Maybe, maybe not. But if so, that's exactly the sort of trigger that can lead to a broad-based market selloff.

Many people thought that Daimler's unloading of Chrysler to Cerberus was some sort of "great" deal. The question is - for whom? DCX is basically paying Cerberus to take Chrysler off their hands! And there is no guarantee the deal will go either - the UAW is almost certain to be very, very loud on this one, perhaps demanding written job security guarantees - which I suspect Cerberus will be unwilling to provide. While the "game face" is that the UAW is on board, I still give this deal one chance in three of closing.

Not much else to say here. As a pure gamble I bought a small position in May 15 VIX calls this afternoon for 15 cents. They're either worth zero or a bunch - depending on how that CPI number looks. If we get a big selloff this week they'll pay big - but if the market continues upward they'll prove to be a big fat flush.

We shall see tomorrow!

One thing that was interesting - and has not been seen lately - dispersion (down dollar amount) on the S&P was ahead of capital on the upside by a significant amount. The A/D ratio was 17:32, but the down/up cashflow was a big deal, and the down volume was higher as well. This was not true on the DOW, where the AD was 17:13 and capital flows were 2:1 in favor of advancers. This sort of divergence is typically a bearish indicator, although it has low reliability. The Nasdaq 100 also had down capital flow FAR ahead of advancers, along with the ratio being an absolutely awful 27:71.

New highs AND lows on the Nasdaq hit a high level, which is also a coincident indicator and a bearish divergence from the NYSE, where the high/low ratio was close to 10:1.

Confidence in any of this, however, is not high. This is clearly a market that will be driven tomorrow by the economic data.

Note that the remainder of the week the blog will get fewer updates, next week only one a day (in the evenings), and the week following that I am likely to go "dark" entirely. No, I've not gone bust or jumped out a window - just a long-planned break from "reality".

PS: The Canary isn't inside the Cat yet....

See 'yall in the morning.