• The yellow metal is down another $55 today.

Yes, in theory, gold is a great asset class in a world of too much cowbell.

But as I once wrote about gold, there is no way to calculate intrinsic value. So when it drops by $100 per ounce -- as it has over the past two days -- one can have no statistical or quantitative clue whether it is "cheap" and at what price level it provides "value."

At least I have no clue!

• The heavy trading is beyond unbelieveable.

Below is a snapshot of the heavy trading in the Apple (AAPL) weekly options.

This is beyond unbelievable and helps to explain The NBA market and why this gives me pause as to the potentially adverse market consequences.

Apple Options

Source: Bloomberg

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• Mr. Market lives and dies with the "action" of Apple's shares.

With the market (particularly considering Apple's (AAPL) heavy weightings in the Nasdaq 100) and with the average daytrader preoccupied with Apple (through trades in weekly calls and puts) to the point of it almost being an obsession, The NBA Market -- "Nothing But Apple" -- has become the tail that is wagging the dog.

As such, Mr. Market lives and dies with the "action" of Apple's shares.

This is inherently a dangerous situation, as any downside reversal in Apple could cause something of a waterfall for the broader market ... but this is something few are concerned with.

On days like today -- especially after AAPL's shares were up by $25 at one point -- I ask myself: Where are the sell stops?

After all, sell stops, executed in quick succession (if investors and traders take profits), could have a disruptive influence on the markets.

Apropos to my concern, below is a chart prepared by "Fast Money's" Steve Cortes that compares the price of Apple and Google (GOOG).

Apple vs. Google

Source: Bloomberg, Steve Cortes

View Chart »

• It's too ludicrous for words.

I won't write it, but it has to do with Apple's (AAPL) shares.

• I just sold most of my SunTrust (STI) just now after the bank came out saying it will beat analysts' estimates.

The shares have had a big run -- I'm putting the money into Pepsi (PEP).

• I just don't buy the takeover story.

I have decided to take off some E*Trade (ETFC) common and calls into today's rise.

I just don't buy the takeover story.

• And here the Lindsay's pattern vs. the DJIA.

And speaking of "Three Peaks and a Domed House," below is Yale Hirsch's (from Stock Trader's Almanac fame) interpretation of the technical pattern based on the Dow Jones Industrial Average.

DJIA and Lindsay's Pattern

Source: TradeNavigator.com

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Basically, Jazzy Jeff sees some modest upside and then a fall.

• Here is a look at the Dow Jones Transportation Average vs. the S&P 500.

Among my concerns expressed over the last two weeks has been the deterioration in the Dow Jones Transportation Average.

Below is an updated chart of the trannies vs. the S&P 500.

S&P 500 vs. Dow Jones Transportation Average

Source: Bloomberg

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• It's as if every single talking head nailed this rally.

I have to tell all of you, in watching the business media this week, it's as if every single commentator and talking head nailed this rally and purchased an outsized bank position to boot.

And of course everyone's No. 1 position is Apple (AAPL).

Jeez, Louise!

• Here is the latest look.

Below is an updated chart of George Lindsay's "Three Peaks and a Domed House" in which I have forced the technical configuration with the pattern of the S&P 500's rise.

S&P 500 and Lindsay's Pattern

Source: Bloomberg

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• Today's volume in the January 2013 15 calls is over 20,000.

Speaking of my gnome's rumor on E*Trade (ETFC), today's volume in the January 2013 15 calls is over 20,000 (18,800 block traded at $0.33).

• I am adding to this long.

I am adding to my PepsiCo (PEP) long now.

• Rumor has it.

High above the Alps, my gnome is hearing a takeover rumor (again!) regarding E*Trade (ETFC).

I have no clue.

• I initiated a short in Bridgepoint Education and covered my short in Henry Schein.

Housekeeping items: I put on a new short yesterday in Bridgepoint Education (BPI, for-profit education) and covered an old short, Henry Schein (HSIC).

• I addressed the end of the bull market in bonds on last night's episode.

"I woke up in a great mood; I don't know what the hell happened."

-- Mike Damone (Robert Romanus), Fast Times at Ridgemont High

Last night, I was on "Fast Money" with Michelle "Vice President" Caruso-Cabrera, Guy "Spicoli" Adami, Brian "Pirate King" Kelly, Hedgeye's "Keithy" Keith McCullough and Karen "Linda Barrett" Finerman.

I addressed the end of the bull market in bonds.

Let's go to the tape!

Michelle started by saying that this call could be an epic one.

My view is that bonds, which were known as "certificates of confiscation" 30 years ago, could again be called confiscatory.

I started by giving a perspective on the bond market.

Bonds have returned close to 50% since the beginning of 2010 and, over the last 40 years, have lost over 5% in only four years: 1987, 1994, 1999 and 2009.

Stated simply, bonds are no longer risk-free assets; going forward, they are return-free assets with a lot of risk.

I cited five reasons for the end of the bull market in bonds:

1. diminished flight to safety;
2. flow of funds out of bonds and into stocks;
3. recovery of confidence;
4. rising inflation; and
5. the failure to address the U.S. fiscal imbalances (specifically, Europe has made progress, as evidenced by lower sovereign debt yields and rising markets).

Based on the schmeissing of gold, the fear trade might be over. (Gold is at a seven-month low relative to the S&P 500.)

Guy asked whether stocks and bonds can drop at the same time, and I responded that there is ample evidence over history. Bonds can fall in price, even in a muddle-through setting.

I put 10-year yields into perspective; they are about one-half the yield of the recession 11 years ago. Bond holders today are accepting a negative real rate of return, as the 2.10% (now this morning at 2.20%) yield compares to the implied inflation rate in the 10-year generic TIPS at 2.32%.

Brian Kelly got into the next discussion. I said that, over history, long-dated bond yields track nominal GDP. Nominal GDP (currently about +4.3%) is the sum total of real GDP (now about +2%) and inflation (now about +2.3%).

Brian asked what value there is in shorting the 10-year when real growth is low, but I think he misunderstood the point I was making. It is not real GDP that yields track but the summation of real GDP and inflation.

Brian also asked my view on banks, a sector on which I was previously positive. I suggested that, given the robust rally this week (and over the last five months), banks should now be sold, as the economic recovery remains weak and that should trump the steepening yield curve. Net interest margin will remain pressured, and loan growth (especially in the seasonally weak first half) is disappointing. (Total domestic loans are barely up year over year). Meanwhile, fee income is limp, and expenses are elevated (as FICA and compensation costs are increasing). All of the above could abort the bank stock rally.

Hedgeye's Keith McCullough asked about the influence of the U.S.'s large deficit. Will that ever matter?

I said that is an important point to my negative assessment of bonds, as the failure to address our fiscal imbalances could haunt the bond market. The November elections (a Democratic president and Republican Senate and House) could result in gridlock. This gridlock could encourage bond vigilantes and further alienate foreign central bankers in their appetite for our bonds and notes.

• Mea culpa.

It is the ever-present risk for the self-styled contrarian that the past literally does repeat itself and that the crowd outsmarts the remnants. Indeed, the past repeats itself almost constantly, as witness the multitude of Tuesdays that are virtually indistinguishable from the multitude of preceding Mondays. Disruptive, let alone epochal, change is necessarily rare, and the avant-garde thinker is prone to see shadows or to shoot at ghosts. Extensive experience has taught me that there are many ways to be wrong about the markets: through shortsightedness, of course, but also through excessive farsightedness; through price, ignorance, bad luck, impatience, imagination or sophistry. My signature variations on this latter pitfall are to misapply "the lessons of financial history." History undoubtedly teaches lessons about investment, but it does not say which lesson to apply when. "Find value, always" is as good a precept as any, but value is subjective and its definition is liable to change. In highly speculative markets, value means "it is going up." One must stay abreast.

-- Jim Grant, Minding Mister Market: Ten Years on Wall Street With Grant's Interest Rate Observer

Mr. Market is the final arbiter on Wall Street, and despite my protestations of slowing economic growth, contracting margins and profits, and expanding political and geopolitical risks, I have been wrong in my near-term market outlook.

It is clear to this observer that near-term liquidity has trumped current and prospective fundamentals.

As well, in calling out the JPMorgan Chase (JPM) bulls (Fusion's Josh Brown and others) earlier this week, I failed to see the breakout in the financials after the stress tests were released.

As highlighted over the last few days, the financials have led a breakout of a month-long rolling correction. It has occurred on higher volume, with a 90% up day following two 80% up days following one 90% down day.

While I am maintaining my short position, it is clear that the timing of my negativity was wrong-footed and a final surge in stock prices might be needed before a correction occurs.

Frankly, I am not sure.

What I am sure of is that the game is long, the ball is round and, in the fullness of time, markets are mean-reverting and usually always move back to fair market value (which I gauge at around 1350 on the S&P 500).

Mea culpa.

Mea culpa squared!