Friendship Circle New Jersey Annual Banquet 2010 feature presentation illustrates how we can help people with special needs just by changing the way we think.

Great stuff here by Dylan Ratigan on the Lehman fraud, with assist from Eliot Spitzer. Hat tip Clusterstock.

Don't forget though, it was the fault of the shorts and the elimination of the plus tick rule.

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So hard to believe, but LEH was full of it, and it wasn't actually a cabal of shorts that brought them down. And Barry Ritholtz wants an apology.

In the early days pre-meltdown, there were a handful of skeptics pointing to problems at firms like AIG, Fannie Mae, Bear Stearns and most especially Lehman Brothers.

It was not the media or the analyst community that identified the frauds, but the short sellers. In this sad tale of criminality and corruption, the shorts were the heroes. They employed an army of traders, forensic accountants, and non-cheer-leading analysts to kick the tires of the major firms where something smelled funny.

When it came to Lehman Brothers, foremost in the crowd of shorts was David Einhorn. There were many others (me included), but it was Einhorn who most completely critiqued Lehmans balance sheet, and most vocally called out the shenanigans there. he is the hero in this tale.

At the time, the media gave LEH the benefit of the doubt. And for his troubles, Einhorn was often criticized — even trashed — by various people. The most vocal criticism came from usually astute Charlie Gasparino (then at CNBC, now at Fox Business).

But when it came to Fuld, Gasparino was off his usual sharp game. Whether he was too close to Fuld personally, or it was simply another case of access journalism is unknown. As I warned, and Charlie acknowledged on the air, Fuld was using him. (He disagreed).

It's not real fair to pick on CNBC though. Their mission is to defend CEO's and major corporations in general from the pesky rabble. When in doubt, believe management, after all they have no incentive to ever go on air and give anything but the unvarnished truth.

But hey, if you have a moment, check out the video, it should get frozen in a time capsule. I especially love the apologist nodding in the bottom right every time the CNBC gang points out the important differences between Bear Stearns and Lehman, Jimmy Cayne and Dick Fuld, et. al.

Bespoke yesterday noted an increase in VXX volume, so figured we'd take a look at it in 3D here.

First off, the real spike was back in January, and was well-timed. For the buyers at least. However it reached a crescendo in early February right at what looks like a pretty distinct high. Those bars coming out of the left compare net volume at varying price levels, and as you can see, the low 30's remains the most popular price level here over the past half year. You can also see that reflected in the On Balance Volume, which peaked then and proceeded to fall off a cliff. Which is not too surprising given that this pup went down on 18 of 19 sessions.

I'm also not sure I see much volume spike here. Other than a busy Monday, the numbers look in line with everything since January.

But even if we did, I really feel the world has selective memory when it comes to VXX volume, or those big VIX call buys. The natural order flow in both is clearly to buy, for the same reason indices tend to see more put interest than call interest. By and large these are hedging vehicles and someone along the food chain is worried about tail risk. When a big VIX call buy coincides with a market top, we notice, but the point is, there are big call buys most every day in there. And most days over the past month+ have seen ugly volatility action. Someone will catch the bottom in the VIX, but it's likely just against something else and not pure speculation. And certainly unlikely it's the only stab that buyer made.

Getting some low put/call readings as of late. Mean much? Well, we go over it a bit on Options Zone.

The CBOE Volatility Index (VIX) is certainly the most popular market gauge investor fear, but it's not the only one. Let's not forget the put/call ratio, which is simply a ratio of put options to call options that have traded over a given time period.

The put/call ratio is used to measure investor sentiment. The theory is that the more puts that trade, the more bearish the sentiment and, ergo, the more bullish from a contrarian standpoint.

Please click thru here for the balance of the posting.

OK, we're never going to fix the NHL. They're not shrinking the league or the season or ticket prices any time soon.

Plus it's getting nice out, time to fix MLB. Tom Verducci of SI relays some ideas in the "bandied about" stage.

When baseball commissioner Bud Selig named a 14-person "special committee for on-field matters" four months ago, he promised that all topics would be in play and "there are no sacred cows." The committee already has made good on Selig's promise by discussing a radical form of "floating" realignment in which teams would not be fixed to a division, but free to change divisions from year-to-year based on geography, payroll and their plans to contend or not.

The concept gained strong support among committee members, many of whom believe there are non-economic avenues that should be explored to improve competitive balance, similar to the NFL's former use of scheduling to help parity (in which weaker teams were awarded a weaker schedule the next season).

As with most issues of competitive balance, floating realignment involves finding a work-around to the Boston-New York axis of power in the AL East. In the 15 seasons during which the wild-card system has been in use, the Red Sox and Yankees have accounted for 38 percent of all AL postseason berths. The league has never conducted playoffs without the Red Sox or Yankees since that format began -- and in eight of those 15 years both teams made the playoffs. Since 2003 the Sox and Yankees have won at least 95 games 11 times in 14 combined seasons.

One example of floating realignment, according to one insider, would work this way: Cleveland, which is rebuilding with a reduced payroll, could opt to leave the AL Central to play in the AL East. The Indians would benefit from an unbalanced schedule that would give them a total of 18 lucrative home dates against the Yankees and Red Sox instead of their current eight. A small or mid-market contender, such as Tampa Bay or Baltimore, could move to the AL Central to get a better crack at postseason play instead of continually fighting against the mega-payrolls of New York and Boston.

Sounds like an awesome concept actually. Look at the Blue Jays, were they any worse than the Twins over the past decade? Likely not. Yet nowhere close to the playoffs. Or the Orioles now, who look on the right track, but where's it going to get them? At best they're likely the Blue Jays of the next decade, will get decent but 85-90 wins will get them nowhere.

I usually would say not to touch it, all these things even out. This one's not evening out. And a salary cap's just not workable, you can't get there from here. Unless you just unilaterally take the Yankee revenues, would make no sense to have them only pay out a fraction of what they rake in. So rotate teams around, it's as good a thought as any.

One big thorn though, how do you actually do that? If you throw all low payroll teams in one division, you're essentially inviting teams to cut and slash their way to mediocre talent that can then go compete in a bad division. But throwing in a team mailing it in, like this year's Indians, with AL East wolves, makes no sense. Yankees and Sox playing 18 each against the Indians/Jays/Royals basically lets them start setting their playoff rotations in June.

So any serious revamping likely has to start with doing the one simple thing they'll never do, split the Yankees and the Red Sox. The 3 West Coast teams have to stay in the same division as each other in any format, so let's start with a West of Angels/A's/Mariners, the Yankees in 1 AL Division and the Red Sox in the other. Throw an NL team in, let's say the Brewers and we have a 15 team league. Rotate the Brewers and the other 9 teams between the 2 AL West slots and the 8 spots in the Yankees and Red Sox divisions. Change the format of interleague play so you canactually  have 15 teams in each league. And as long as you're changing interleague, stop making the Mets play the Yankees 6 times each season, it's not a novelty any more. Also, balance the schedules, if nothing else it better divides the gates for Yankee and Red Sox road games.

How about this, we pair up the 10 teams so each one has a designated rival who will always be in their division. How about Rangers/Royals, Brewers/Twins, Rays/Orioles, White Sox/Tigers and Jays/Indians? The first two pairs alternate years in the AL West, the other 3 pairs will rotate between the Yankee Division and the Sox Division along with 1 other pair.

It's a Very VIX World as we all know, but it's far from the only volatility index out there. Among others we have RVX, a proxy for Russell options. Can we learn much comparing Russell vo; to the Good Ole VIX? Steve Place has this to say.

One relationship I’ve been watching was the relationship of smallcaps and the S&P. The rule of thumb is that when smallcaps are outperforming, that means there is an appetite for risk and beta-chasing in the market, and upside momentum should follow. However, we’re still in a period of a highly correlated market so while that signal is valid, I started to look for other indicators related to this relationship.

Enter the volatility indicies. We normally hear of the VIX, which is the normalized expectation of volatility 30 days out. This is based on the perception of market risk via the SPX options board. We also have the RVX, which is analagous to the VIX except it uses RUT options. So there are two measures for market risk, but they are different markets.

.......By looking at the key “turning points” in the moving average, we can see that this is a leading indicator in the markets. This makes sense– when higher premiums are being paid for “riskier” names, that means option players are starting to anticipate a slowdown in risk assets, which also include equities.

I’m not sure if I can derive any predictive power out of this relationship, but it is something worth looking into.

Indeed. The chart above shows 20 Day MA for RVX:VIX over the past 2 years. I'd agree with Steve, it's pretty interesting, but not quite ready for any sort of predictive power. I'd say the most you can glean here is that upslopes in the ratio coincide with bull moves. Which in a way is odd, shouldn't you see greater fear in smaller stocks at sentiment extremes? That's what I would have thought, but the nature of the market is quite the opposite. When you see fear, literally the first thing you get is a run to SPX puts. Which would obviously cause this ratio to tank.

So right here right now, this tiny indicator actually speaks bullish for the market.

But what if we take this one step further, does it say anything about the relative performance of Small vs. Big going forward? Well, here's a graph of that ratio over the past 2 years.

Well, the last couple troughs in the volatility ratio were good times to go long IWM instead of or against SPY. But you would have gotten positively smoked trying that in October 08. Then again Fall 08 was just one big outlier stretch to begin with.

So why is this ratio in general a better concept than SPX:VIX for one? Well, at the very least, it's an apples to apples comparison, vol. stat vs.vol. stat. It's by no means anything magical, just another perspective.

Saw a couple interesting looks at ratios involving the VIX recently, one I agree with and one, well, no as much. Let's start with the latter.

Ashraf Laidi takes a look at the SPX/VIX ratio, and has this.

Exactly fifty two weeks after the S&P500 hit its 12-year lows at 666, the index rose 68%, driving down the VIX near January's 19-month lows. Much analysis has been done on equity indices and the VIX on the S&P index options. But the relationship between the two merits closer attention. Neither the S&P500, nor the Dow have yet retested their January highs. But the technical dynamics of the SP500/VIX ratio can be used as a possible forward-looking signal for a looming decline in the S&P500 index. On Friday, March 5th (52^nd Friday of the 666 low in the S&P500), the S&P500/VIX ratio hit a 5-week high at 65.38. This level suggests these key developments:

Well, don't want to steal his charts, so you'll have to click thru to see his conclusions. But long story short, the ratio is at resistence.

Does it make sense to even look at this ratio though? Here's what he says.

Such ratio analysis may not be the most popular approach to discerning market dynamics, but their viability can be just as relevant as price charts or macroeconomic technicals. We have shown on this site how ratio analysis of related markets could offer valuable forward-looking signals; Gold/Oil ratio ; Equities/ Gold ratio and gold/silver ratioo

Now we'll take as fact the SPX/VIX ratio is up against some resistence. My big question though is does this ratio have any value to begin with. And the answer in my opinion is no.

First and foremost, you're taking a ratio of 2 entirely different types of animals, a stock index and a statistical calculation. Yes that statistical calculation has a correlation to the stock index (about -.66 correlation) but it's still governed more by math than support and resistence. It has a non-zero lower bound. It has a theoretically limitless upper bound. And as such, this ratio can really do anything.

Let's say SPX hits 1100 and the VIX is 22, then it drifts, then hits 1100 again, but this time VIX is 18. Obviously, the ratio has picked up. Perhaps it's now hit some sort of moving average line. But all it's saying is the the market is less nervous this go around than last go around. The market *should* be less nervous than the less go around as it has now digested the gains and presumably re-tested some sort of support, made a higher low, or whatever.

Charting this ratio necessarily means you have to view the VIX in absolutes. To me it's best viewed with a more subjective eye. In other words in the above example, 22 VIX the first go around may have been very fair for that particular market backdrop, and likewise 18 was in line with the latter backdrop. Yet on just pure ratio,you'd notice the number shooting higher, when in reality it had no effective meaning.

Life's A Journey, and the ride is more enjoyable when you don't have those pesky lawyers to deal with. Lenny wants out (of bankrupcy)!

Former baseball star Lenny Dykstra, who filed for Chapter 11 protection last July, now wants a bankruptcy judge to dismiss his case, claiming he doesn’t belong in bankruptcy.

“Bottom line, you don’t belong in bankruptcy when you have $100 million in assets,” Dykstra said Tuesday in a telephone interview.

And who can argue with that logic? Well, one pesky detail the Journal brings up.

It’s unclear how the ex-ballplayer arrived at the $100 million figure. It also raises the question as to why he sought bankruptcy protection in the first place, since creditors have only filed about $27 million in claims against him. Dykstra referred further questions to his lawyer, who couldn’t be reached for comment.

I'm not entirely sure if Lenny grasps the concept behind allowing someone to file for bankrupcy. Who am I to say though, maybe someone will actually $10 Million for a Twizzler with Wayne Gretsky's toothpriint on it. Or better still, he parlayed 10 Deep Calls in Dow into $50 million.

Some action from yesterday via Cuttone and Company

CF Industries Holdings, Inc. (CF $100.63 last) traded lower after a  Credit Suisse conference in London was somewhat muted. Traders looked to the options market to hedge some longs as the March puts were active. The March 85/90 put spread was purchased 4500x for a $0.48 premium. Puts outpaced calls as 25,000 traded vs. 13,000 calls.

OSI Pharmaceuticals, Inc. (OSIP $57 last) gained ground after a story that the bid may rise as Astellas Pharma is seeking cancer sales. Traders flocked to the July 60 calls, driving implied volatility north. Over 9,400 traded on the day between $1.25 and $1.45. Open interest in the line was a mere 1,980 contracts, so most of this volume was opening.

Commercial Metals Company (CMC $17.75 ) soared over 7% as chatter of a possible deal with Nucor hit the street. Traders looked to the March 17.5 calls as over 19,600 traded on the day. This is about equal to the open interest.  In the April contracts, over 7,000 of the 20 calls changed hands where open interest was a mere 1,373. A few of these rumored deals have occurred over the past few months so traders felt they needed to be involved.

Will have to check what he means on the OSIP one, but interesting situation there. The stocks's already well north of the bid, and the puts are not high for a deal name. The market clearly expects a higher bid. And now a much higher bid if they think the 60's are in play.