• A source reports on a message from the government to its diplomats.

According to an intelligence consulting source, North Korean diplomats have been informed that the country has completed preparations to test launch missiles over Japan tomorrow.

• Thanks for reading my Diary today.

I am sorry that I have been so off base recently, but the body of my analysis (contained in my Diary's thread) consistently says I should be positioned cautiously (much like 1987, 2007 and various points in 2011-12).

I try to conscientiously document some of the more important parts of my analysis: slowing global growth; vulnerability of domestic profits and profit margins; multiple valuation concerns; a narrowing of the advance and emerging divergences; the defensive flavor of the markets (typically, a market warning); the artificiality of the advance in stocks and bond prices (caused by QE which will have some unintended consequences); glittering generalities; and even the incessant cheerleading in the business media by many who have no money in the game.

Enjoy your evening.

• How much to buy?

My mavens on the floor of the exchange see $100 million to buy at the close, with $60 million to buy in consumer discretionary stocks and $30 million to buy in financials.

On the sell side, energy has $50 million to sell and industrials $30 million to sell.

The largest individual buys are JPMorgan Chase (JPM, $25 million), Merck (MRK, $20 million) and EMC Corporation (EMC, $17.5 million). On the sell side are Johnson & Johnson (JNJ, $25 million), ExxonMobil (XOM, $20 million) and U.S. Bancorp (USB, $12.5 million).

• And Sebastian growls.

iShares Russell 2000 Index Fund (IWM) is down on the day.

Sebastian is cussin'.

• The April $157s.

I am averaging down in my SPDR S&P 500 ETF Trust (SPY) April $157 puts now.

• Shoulda, woulda, coulda.

My small-cap analyst, Sebastian, is angry that I haven't expanded my iShares Russell 2000 Index Fund (IWM) short into today's market ramp.

• I am taking in some of my AmEx and Danaher shorts.

I have covered a portion of my American Express (AXP) and Danaher (DHR) shorts for small gains, as a gift to the short gods and as a means of controlling risk.

• Our channel checks suggest that even my below-consensus EPS forecasts will not likely be met.

Every stock has a price, as I recently wrote in "One Shining Moment."

I thought Apple (AAPL) was such a stock, a company that is experiencing profit challenges owing to a more competitive business landscape.

The problem I have in holding onto this long rental is that our channel checks suggest that even my diminished and below-consensus EPS forecasts will not likely be met in the soon-to-be-reported quarter.

As well, guidance is likely to be weak.

Really weak, imho.

• Run, don't walk to watch Kyle Bass's take on Japan.

I actually think it's the beginning of the end...When you have 20 years of pro-cyclicality of thought manifesting itself in the way that it has in Japan...I am not naive enough to think I can predict the end of a 70-year debt super cycle with any kind of precision, but looking at the changes in the qualitative perception of the participants is something that I think is key to the situation and we saw a big change on Friday.

When I started sharing our views more globally it was the middle of 2010 and I said I believe the stress would begin to show itself in the next three years. Pretty much three years in, we're close, and the stress is beginning to show. Maybe that was luck at the time, but now when you ask the timing--look everyone wants the crystal ball and it's really difficult to predict this, but what you can do is follow where I think the stresses are going to show in the marketplace, but more importantly, you have to get into the heads of the participants because they all have a collective sense of fatalism. When you do the quantitative analysis here, you know they are insolvent. Everyone who owns the bonds knows they are insolvent. It's a question of how long they can hang on. What changes their views are a multitude of variables, but it's really important to follow any change in those views. When you see things like Argentina, Greece, Cyprus, Ireland, Italy--you see how fast things go from perfectly stable to completely unstable. In this case I think it will happen more quickly because of the 20 year buildup.

-- Kyle Bass

Here is Hayman Capital's Kyle Bass's take on Japan on Bloomberg TV.

• Run, don't walk, to read a former intelligence officer's take on the Korean Peninsula. 

I thought this article on Korea was a worthwhile read, as I know little about that area of the world and potential powder keg.

• Brinker, Cheesecake Factory and Darden.

Here are the charts of Brinker (EAT), Cheesecake Factory (CAKE) and Darden (DRI) after the latter's warning.

• Taking a small loss.

I have scaled out of my Apple (AAPL) long rental starting at $428 for a small loss.

• Shares tumble.

Darden Restaurants (DRI) warns of slowing revenue and profit growth. Gapping lower.

• Like clockwork.

The all-too-familiar pattern of afternoon buying has commenced in the last hour.

Maximum frustration to the bears (like myself) in a market that doesn't seem to have a downtick.

That said, I am staying the course and fighting it.

• Check out the series of lower highs and lower lows.

Europe continues to add pressure on global economic growth, and its bourses are signaling problems ahead.

Case in point: the DAX.

Check out the series of lower highs and lower lows.

• Here is a pie chart.

Below is a pie chart of the S&P 500 by sector.

S&P 500 Sector Breakdown

Source: Bloomberg

View Chart »View in New Window »

• I am also adding to my Yahoo! short.

I am initiating a small Starbucks (SBUX) short based on my channel checks, and I am adding to my Yahoo! (YHOO) short at $23.85.

• Here are some more of my trades today.

Late last week I purchased some Altisource Portfolio Solutions (ASPS) under $70 -- I just reduced the position by the same amount at over $76.

I just added to my SPDR S&P 500 ETF Trust (SPY) April $157 puts at around $1.55, and I shorted more SPY at $156.45.

• Here's a whiff.

Breadth at 11:30 a.m. EDT:

• S&P 500 -- 220 advancers to 269 decliners
• NYSE -- 846 advancers to 975 decliners
• Nasdaq -- 875 advancers to 1,169 decliners
• Russell 2000 -- 702 advancers to 1,153 decliners

Volume on the S&P is even with the past 10-day average, 6% lower than the past 30-day average and 15% higher than yesterday's volume for this time of day.

• An article in Zero Hedge explains the dire outlook for France.

I recently opined that the southern members of the EU are in an economic death spiral and that France is not far behind.

Here is a Zero Hedge column that highlights the dire outlook for France.

• My gut tells me that there is a slim possibility that the market loses yesterday's gains.

I hate very short-term market opinions because the near-term is usually a coin flip.

But sometimes I have visceral or gut feels -- like today.

And my gut says that there is a possibility (albeit, small) that Mr. Market loses what he gained yesterday.

My advice?

Don't trade on this!

• So far.

Today I shorted more SPDR S&P 500 ETF Trust (SPY) at $156.50, and I am buying April $157 SPY puts at $1.55.

I also added small to a sizeable position in ProShares UltraShort 20+ Year Treasury (TBT) at $60.75, bought Apple (AAPL) at $423.88, and I am bidding for Qlik Technologies (QLIK) and Fortinet (FTNT) slightly below the market.

• The flattening of the yield curve presents a challenge.

Banks, everyone's favorite sector -- Bank of America (BAC) won the "Fast Money" bracket last night -- now face a serious hurdle in a flattening of the yield curve.

Below "Fast Money's" Steve "Hernan" Cortes "de Monroy y Pizarro, the first Marquis of the Valley of Oaxaca" presents the widening gap between the performance of bank stocks and the yield curve (two-year Treasury notes vs. 10-year Treasury notes).

• Here's an intereting chart.

Below is an interesting VIX daily chart including today's intraday action.

VIX

Source: Bloomberg

View Chart »View in New Window »

• I added to my index shorts into yesterday's ramp.

I continue to batten down the hatches into stock market strength.

I have raised my short exposure into yesterday afternoon's ramp by shorting more iShares Russell 2000 Index Fund (IWM) and SPDR S&P 500 ETF Trust (SPY).

• Over 75% of respondents felt that business conditions in six months would be no better or worse than current conditions.

"It appears that there will be little growth coming from the small business half of the economy."

-- NFIB

The weak Small Business Optimism Index -- it fell by 1.3 points, to 89.5 -- underscores my views that:

1. quantitative easing has not trickled down to the smaller/medium-sized companies or to the average American; and
2. the rate of domestic economic growth is likely to decelerate over the last three quarters of the year. (The well known Aruoba-Diebold-Scotti Business Conditions Index, which tracks real business conditions at high frequency, supports the aforementioned slowdown thesis.)

Plans to hire fell to zero from 4%, the weakest reading in a year. Capital spending plans were unchanged. Those expecting a better economy was a weak -28% (flat month over month). Those expecting higher sales fell from +1% to -4%, the weakest reading in four or five months. Those feeling that it's a good time to expand fell to only 4%, the worst read since late summer 2012. Over 75% felt that business conditions, looking out six months, would be no better or worse than current conditions.

Below is a summary of the small business confidence index released this morning:

Small Business Optimism Index: Optimism Slips, No Progress

The NFIB Index of Small Business Optimism fell 1.3 points to 89.5, disappointing, but not a surprise given the current state of paralysis in Washington and the still mixed news on the economy. The Fed is lending the economy a trillion dollars, raising the value of its portfolio to unfathomable levels. In spite of assurances, the impact of creating nearly $2 trillion in reserves that can be loaned out is disconcerting at best, terrifying to some. The economy is hardly growing, but corporate profits are at record levels, an incongruity to most Main Street folk who see the Fortune 500 valuation hitting record highs while millions of small employers struggle to stay in business and tens of thousands have closed their doors, leaving commercial vacancy rates at elevated levels. Virtually no owners think the current period is a good time to expand. Over 75 percent think that business conditions in 6 months will be no better or worse than they currently are. Aggregated, there are no plans to create new jobs in the coming months, although some parts of the U.S. will experience job growth and some sectors will create new jobs (housing and energy in particular). But overall, it appears that there will be little growth coming from the small business half of the economy and as the world economy slows, maybe even less from big business.

And here is the complete report.

• Currently, only five out of 82 stocks I have mentioned in my diary are eligible to buy vs. five out of 77 in late February.

Jerry(Jerry Seinfeld): (To Kramer and Morty) What is this about?

Kramer(Michael Richards): I'm completely changing the configuration of the apartment. You're not gonna believe it when you see it. A whole new lifestyle.

Jerry: What are you doing?

Kramer: Levels.

Jerry: Levels?

Kramer: Yeah, I'm getting rid of all my furniture. All of it. And I'm going to build these different levels, with steps, and it'll all be carpeted with a lot of pillows. You know, like ancient Egypt.

Jerry: You drew up plans for this?

Kramer: No, no. It's all in my head.

Morty(Barney Martin): I don't know how you're going to be comfortable like that.

Kramer: Oh, I'll be comfortable.

-- "Seinfeld," The Pony Remark

Below is an updated list of buy levels on selected stocks that I have mentioned on Real Money Pro.

I would now rate only five out of 82 stocks (compared to five out of 77 stocks in late February) as attractive to buy at current levels: Apple (AAPL), Fortinet (FTNT), General Motors (GM), Monitise (MONI.L) and ProShares UltraShort 20+ Year Treasury (TBT).

Let me explain the distinction in the two different approaches I use in addressing a portfolio and to the portfolio's individual stock construction. I would describe this morning's levels exercise as more of a bottoms-up approach toward selecting individual securities, as compared to my calculation of the S&P 500's fair market value (1420), which is a top-down approach toward the broader market. The two approaches will often yield different results, but given today's multiple and fertile investment opportunities, both provide and indicate broad-based value in the marketplace. In the case of levels, 6% of the monitored stocks are eligible to buy (flat with 6% in February's "Levels"). In the case of my fair market value calculation, the S&P 500 (Monday's close at 1560) is approximately 10% overvalued.

1. AIG (AIG), under $36
2. Altisource Asset Management (AAMC), under $105
3. Altisource Portfolio Solutions (ASPS), under $72
4. Altisource Residential (RESI), under $17.50
5. American Express (AXP), avoid
6. Apple, under $430*
7. Avon Products (AVP), under $18
8. Bank of America (BAC), under $10.50
9. Berkshire Hathaway (BRK.B), avoid
10. Bridgepoint Education (BPI), avoid
11. Bristol Myers Squibb (BMY), under $35.50
12. Broadcom (BRCM), under $31.50
13. Caterpillar (CAT), avoid
14. Charming Shoppes (CHRS), acquired
15. Chimera Investment (CIM), under $3.20
16. Chubb (CB), under $82.50
17. Citigroup (C), under $40.50
18. Cohen & Steers (CNS), under $33.50
19. Colgate-Palmolive (CL), under $108
20. Clorox (CLX), under $82.50
21. ConocoPhillips (COP), under $56.50
22. CSX Corporation (CSX), under $22
23. Danaher (DHR), avoid
24. Dell (DELL), under $12.00
25. Disney (DIS), under $52
26. eBay (EBAY), under $50.50
27. E*Trade (ETFC), under $9.00
28. ExxonMobil (XOM), under $83.50
29. Facebook (FB), under $25.75
30. Ford (F), under $12.50
31. Fortinet, under $22.00*
32. Freeport-McMoRan Copper & Gold (FCX), under $31.50
33. Fusion-io (FIO), avoid
34. General Motors, under $28.00*
35. Goldman Sachs (GS), avoid
36. Grand Canyon Education (LOPE), avoid
37. Green Mountain Coffee Roasters (GMCR), avoid
38. Groupon (GRPN), avoid
39. Henry Schein (HSIC), avoid
40. Hewlett-Packard (HPQ), under $18.50
41. Home Depot (HD), under $67.50
42. Home Loan Servicing Solutions (HLSS), under $20.50
43. IBM (IBM), under $202
44. Intel (INTC), under $19.50
45. International Flavors & Fragrances (IFF), under $70
46. iShares FTSE/Xinhua China 25 Index Fund (FXI), under $35.50
47. J.C. Penney (JCP), avoid
48. JPMorgan Chase (JPM), under $45.50
49. Kellogg (K), under 58.50
50. KKR Financial (KFN), under $10.50
51. Legg Mason (LM), under $28
52. Lincoln National (LNC), under $28.50
53. Loews (L), under $40
54. Lowe's (LOW), under $35.50
55. MetLife (MET), under $34.50
56. MGIC Investment (MTG), under $4.90
57. Microsoft (MSFT), under $28
58. Monitise, under 34*
59. Morgan Stanley (MS), avoid
60. Nationstar Mortgage (NSM), avoid
61. Northwest Bancshares (NWBI), under $12.50
62. Oaktree (OAK), under $47.50
63. Och-Ziff (OZM), under $8.50
64. Ocwen Financial (OCN), under $35
65. Peabody Energy (BTU), avoid
66. PepsiCo (PEP), under $75
67. Pitney Bowes (PBI), avoid
68. PNC Financial (PNC), under $62
69. Procter & Gamble (PG), under $75.50
70. ProShares UltraShort 20+ Year Treasury, under $64.50*
71. Prudential (PRU), under $54
72. Qlik Technologies (QLIK), under $24.50
73. Schwab (SCHW), under $14.25
74. Sourcefire (FIRE), under $52.50
75. SunTrust (STI), under $27
76. Target (TGT), under $64
77. T. Rowe Price (TROW), under $71
78. Waddell & Reed (WDR), under $39.50
79. Walter Energy (WLT), avoid
80. Wells Fargo (WFC), under $34.50
81. XL Group (XL), under $28.50
82. Yahoo! (YHOO), avoid

*Eligible to buy at current levels

• Here it is.

Below is today's economic calendar.

Economic Calendar

Source: Bloomberg

View Chart »View in New Window »

• Qlik Technologies gets an upgrade from Evercore.

Evercore upgrades Qlik Technologies (QLIK) a recent object of my affection.

• Let's take a peek at the markets this morning.

The favorite Louisville Cardinals and Mr. Market notch some more wins:

• S&P futures up 1;
• European markets up;
• euro up;
• crude flat;
• gold flat; and
• 10-year yield at 1.75%.