• Watching all of this is too painful!

I am calling it a day early.

Watching all of this is too painful!

Enjoy your evening and thanks for reading my diary.

• The Nasdaq is closed.

• Break in!

From the exchange:

All securities will be released at 14:55 with a 15-minute quote only period with trading resuming at approximately 15:10. NASDAQ will not be cancelling open orders on the book prior to a re-open. Customers who wish to cancel their orders may do so and any customer who wishes to not participate in the re-opening should cancel their orders prior to the resumption of trading.

• He says he will meet with Apple (AAPL) CEO Cook on buyback.

See below:

From my perch, this tweet by Icahn minutes before a possible reopening of Apple's shares (and after a breakdown under $500) is borderline promotional -- manipulative and questionable from an ethical standpoint.

But I guess Twitter, which i have left, is the new frontier (or Wild West) for all sorts of cowboys, wealthy and not-so-wealthy!

• The Nasdaq halt doesn't impact the markets as much as many think it does.

Many are surprised that the levels of stock prices have been materially unaffected by the Nasdaq's flash freeze.

Upon reflection, why should this impact the short-term direction of stock prices?

As Josh Brown just mentioned, the majority of retail investors are in ETFs and not in individual Nasdaq issues.

As I wrote, the flash freeze likely only impacts daytraders who need to be flat by day's end.

But in all likelihood, their sales (as they are predominantly long) will be met by purchases form counterparties.

It's a big deal for the Nasdaq and the media that is reporting it but not as market impactful as many expect/think, imho.

• Treasuries Vs. S&P

My buddy/pal/friend Steve "Hernán" Cortés "de Monroy y Pizarro," the First Marquis of "Fast Money" chimes in about  getting long Treasuries.

TREASURIES vs. S&P

-with 5 yr and shorter duration products on lows, worth a look again at this spread

-as bulls, we'd hoped for a breakout outlined below to finally get our model near term bullish Treasuries relative to Shares

-although bullish Treasuries has been very tough sledding lately, it is modestly encouraging that this spread has at least stopped making lower lows

-we remain skeptical of US Indices, esp. relative to EMs, and think Aug selling in Shares is meaningful and will force some asset allocation back to FI

-all that said, need a breakout above 60.5% here before we could try to get longer USTs

Here is Steve's accompanying chart:

View Chart »View in New Window »

•  What about order flow?

Today, trading shops (read: day traders) account for an increased amount of total listed and non-listed volume.

Many of these day traders need to be flat at day's end. 

Stocks generally move on at-the-margin flow.

Ergo, it is still possible that we could see a flood of (sell) orders if Nasdaq trading commences near the close.

That order flow may or may not be met by corresponding buy orders.

Stay tuned.

• A contrarian thought.

Since every hedge hogger I know has purchased out-of-the-money puts that expire in the major indices tomorrow (owing to the Nasdaq halt) methinks, as a contrarian, that the "woosh" will not occur.

My two bits.

• I'm taking a big position in the TWM.

Despite what you might hear on the business media platforms, no one can trade on the Nasdaq now.

So, how can I make money from this?

There is probably a 50/50 chance that the entire market whooshes lower if this continues for much longer -- so, just in case, I am getting aggressive on my ProShares UltraShort Rusell 2000 (TWM) long.

• The Nasdaq appears untradeable through any routing system.

I can't trade on the Nasdaq now -- through any routing stystem.

This is unprecdented and amazing.

Throwing out a reason ... cyber warfare/attack?

Or simple technological incompetence?

• Trading in Nasdaq symbols has been halted streetwide.

Break in: Trading in Nasdaq symbols has been halted streetwide.

• I added on a break of $500.

I am liking this week's Apple (AAPL) short, and I have added to the position as it breaks the figure ($500).

• I like the premiums.

I am selling (naked) September ProShares UltraShort 20+ Year Treasury (TBT) calls now. I like the premiums.

• Let's parse through this morning's economic data.

The Conference Board's Leading Economic Index (LEI) rose by 0.6% (slightly better than consensus forecasts).

The leading indicator increase was driven by lower borrowing costs, a rise in building permits and higher stock prices. Unfortunately, all three will likely be lower in the next report!

The Markit PMI rose to 53.9 from 53.7 in the prior month, but the print was a bit less than forecast.

The Kansas City Fed manufacturing index increased to 8, the highest reading since May 2012.

• I just committed some of my pension plan to 30-year U.S. bonds this morning.

In keeping with my iShares 20+ Year Treasury Bond ETF (TLT) purchase, I just committed some of my pension plan to 30-year U.S. bonds this morning.

• Thanks to my TWM buys.

I have moved from a market-neutral position to a very slight net short mode -- thanks to my ProShares UltraShort Russell2000 (TWM) buys.

• Here's how my bond thesis is guiding my trades.

Radian (RDN) is trading well, but I wouldn't chase.

Obviously, if I am correct on iShares 20+ Year Treasury Bond ETF (TLT), the shares should advance further over the near term.

I am bidding for Altisource Residential (RESI) now based on the same TLT logic.

• Run, don't walk, to check out Jim Cramer's coverage of Hewlett-Packard and Meg Whitman.

Jim "El Capitan" Cramer's column on Hewlett-Packard (HPQ) is direct, analytical and brilliant.

And his interview with CEO Whitman was extremely well done and informative.

• Being aggressive at $15.82.

I am getting a bit more aggressive in ProShares UltraShort Russell2000 (TWM) now at $15.82.

• Rumor has it that he is.

My gnome is hearing vague rumors that Carl Icahn is accumulating a position in Dreamworks Animation (DWA).

I have no clue if the rumor is accurate.

• It's a small purchase at $15.87.

I am back, buying a small position in ProShares UltraShort Russell2000 (TWM) on a scale lower.

I started at $15.87.

• Here is my rationale.

Longtime subscribers know my view that shorting bonds is the trade of the decade.

Back in May 2012, I gave a presentation at Whitney Tilson's Value Investing Congress in Omaha that had as its theme that the yield on the 10-year U.S. note was preposterously low and that bonds should be (recklessly) shorted.

Prior to that, I gave a lecture at Northwestern's Kellogg School of Management on the same subject, and I later presented the lecture on Real Money Pro.

While I believe that the inevitable move of yields is higher, the move to higher interest rates will not likely be in a straight line, and there will be trading opportunities in the interim when bonds can be rented.

After the rise in the yield on the 10-year U.S. note from 1.45% in May 2013 to 2.92% this morning (the highest yield since mid-2011) -- and this on the heels of better overnight data out of the EU and China -- it is my view that a trading opportunity is now at hand and that interest rates are likely to back off in the near term.

Below is my rationale:

1. Economic data are mixed. While some measures of U.S. manufacturing activity have improved in July, housing is about to stall/pause, and growth in the jobs market is disappointing -- the jobs being added are low-paying ones. Last week's initial jobless claims (just released) confirms my view that employment growth will be slow. Claims came in at 336,000 compared to expectations of 330,000 and 323,000 the week before.

2. Future domestic growth is expected to remain subpar. At best, a slight acceleration of real GDP from second-quarter 2013's +1.8% is seen in this year's second half. It remains my baseline view, however, that the U.S. economy is an extended period of subpar 2% real GDP growth. This will disappoint stock investors but could reward bond investors.

3. Sentiment is profoundly negative on the asset class. Back in May, not a soul dared offer the concept of shorting bonds (as the investment graveyards were filled with beaten-down and bankrupt bond bears). Now, only three months later, the call of shorting bonds is the investment mantra of nearly everyone. No doubt, poor sentiment/psychology for this asset class could take yields higher and bond prices lower, but at 2.92%, I like the entry point.

4. Yields as measured against nominal growth are finally a bit high. Historically, the yield on the 10-year U.S. note is between 0.8x and 1.0x the nominal domestic GDP growth rate. (Note: I would argue that, given the structural headwinds to global growth, 0.8x to 0.9x may be an appropriate multiplier going forward.) Year-over-year nominal U.S. growth is currently +2.9%; 0.85 multiplied by 2.90 yields an equilibrium, or fair market value, of the 10-year yield at 2.465%, or about 46 basis points below the current yield.

5. The long end of the yield curve has increased dramatically relative to the short end. The spread between the 10-year yield and the federal funds rate is now over 280 basis points compared to the long-term average of about 180 basis points.

6. Real interest rates are higher. The real 10-year U.S. note yields +1.8% -- it was slightly negative only three months ago -- which is in line with expected trend/long-term real GDP of +2% to +2.5%.

I would buy the iShares 20+ Year Treasury Bond ETF (TLT) under $103.

• Let's take a peek at the overnight and early-morning price action in the major asset classes.

The rundown:

• S&P futures up 7;
• Nasdaq futures up 18;
• Nikkei down 0.45%;
• China Shanghai down 0.28%;
• European markets up;
• euro down;
• crude up $0.45;
• gold down $4; and
• the 10-year U.S. note yields 2.92% (up 2 basis points day over day).

Worth mentioning:

• Mr. Market has no memory from hour to hour. There were roughly about 300 points (back and forth) of DJIA moves during yesterday's trading session. It is for this reason (and others) that my view is that the backdrop favors opportunistic trading over long-term investing. In the weeks ahead, I will continue to deploy a quick and active trading strategy -- it's not for everyone, but it is for me in a range-bound and relatively trendless market.
• I continue to believe that the top is in for 2013. The market is broken and the July top may be more significant than being just a yearly top.
• I covered all of my index ETF shorts into the 13- to 15-point swoosh lower after the release of the FOMC minutes. Mr. Market proceeded to rally back to slightly up and faded badly near the close of trading for the fourth consecutive day. Changing direction again, futures are higher this morning.  Late Wedneday night (too late to post)  I actually took a small long rental in SPDR S&P 500 ETF Trust (SPY) at $164.13 -- futures were weaker after the close -- which I sold in premarket trading at $164.88.
• I added to my iShares 20+ Year Treasury Bond ETF (TLT) long yesterday and this morning. Later today, I will explain why.
• Why did stocks fade after the FOMC minutes were released? Most, including myself, Steve Liesman and Jon Hilsenrath heard a no-news, dovish spin to the release, but I don't think we assessed properly the following paragraph, suggesting that the Fed is preparing to taper and/or reduce system reserves -- In support of the Committee's longer-run planning for improvements in the implementation of monetary policy, the Desk report also included a briefing on the potential for establishing a fixed-rate, full-allotment overnight reverse repurchase agreement facility as an additional tool for managing money market interest rates.... [This facility would allow the Fed to drain reserves and sterilize QE.]
• I am now in a market-neutral position. My gross and net exposure is at the lowest level of the year, and my cash reserves are at the highest. As discussed, I am still expecting 1550-1600 on the S&P 500, but it will not likely venture there in a straight line. From Bespoke (hat tip Bill King!) -- Dow has had six 6-day losing streaks during current bull market (since 3/9/09). Up on day seven 4 of 6 times.... Over the last 30 years, the Dow has had 28 6-day losing streaks. The index has been up on day seven 75% of the time.
• The proximate causes for the premarket futures strength this morning are economic data from Europe and China. The overall European composite PMI came in 51.7 (up from 50.5 in July and vs. the Street's 50.9). Services was 51 (vs. the Street's 50.2), and manufacturing was 51.3 (vs. the Street's 50.7). For France, manufacturing was 49.7 (vs. the Street's 50.3), and services was 47.7 (vs. the Street's 49.2). For Germany, manufacturing was 52 (vs. the Street's 51.1), and services was 52.4 (vs. the Street's 51.7). China's flash PMI was notably ahead of forecasts, rising 2.4 points, to 50.1 (vs. the Street's 48.2). This is the highest reading (and the first month-over-month increase) since April. Also, it was the first time the Markit number has risen above the 50 growth/contraction demarcation point since April. (Note: Nonetheless, the Chinese and Japanese markets slipped after the data were released.)
• Retail woes continue. Earnings reports at L Brands (LTD) and Target (TGT) continue provide data points that suggest retail sales will weaken in the quarters ahead. Abercrombie & Fitch (ANF) just reported a huge miss as did Sears Holdings (SHLD) earlier this morning.
• Providing more eveidence of a pause in housing, Wells Fargo (WFC) announced that it will be shedding 2,300-plus jobs in the mortgage area. (A couple of months ago, I wrote that this would occur.) This announcement will likely reinforce the present fears around housing demand, and investors need to keep in mind the distinction between refinancings and new purchases. Nearly every bank management team back on the July second-quarter earnings conference calls was cautious on refinancings and forecast a steep drop-off in activity given the backup in rates, and several hinted that they may need to take cost-cutting actions to compensate.
• Hewlett-Packard (HPQ) spit the bit, making for another weak technology earnings report and reduced guidance.
• But the really big news on Wednesday was that the California Little Leaguers Win in the ninth Inning! The biggest news of the day, for some of us, was the Chula Vista win, which takes them into the U.S. Little League championship on Saturday. I will be watching the finals on Sunday between the U.S. and international winners! Japan had a big win over Mexico on Wednesday. My guess: It's Japan vs. California in the finals. Japan will be tough to beat, as they are disciplined and have an amazing pitching staff. 

In the press:

• The Wall Street Journal -- "Mr. Obama's Middle Class"; Are price/earnings multiples really inexpensive?
• Financial Times -- "The Markets Should Not Have Expected Much From Carney"; "The New Fed Chair Should Not Be One of the Usual Suspects."
• Business Insider -- Is a massive rotation into European stocks ahead?
• The Washington Post -- Why not choose both Yellin and Summers?

Possible economic and profit catalysts that could impact trading today:

• Eurozone flash PMI for August (4:00 a.m. EDT, out, see above).
• U.S. initial jobless claims (8:30 a.m. EDT, 330,000 estimate); continuing claims (2.963 million estimate).
• U.S. flash PMI for August (8:58 a.m. EDT, 54.2 estimate).
• U.S. home price index for June (9:00 a.m. EDT, +0.6% estimate month over month).
• Leading economic indicators (+0.5% estimate).
• Kansas City Federal Reserve Manufacturing Activity (6 estimate).
• Fed Jackson Hole Summit (Aug. 22-Aug. 24).
• Fed's Fisher speaks.
• Obama travels by bus for two days through New York and Pennsylvania, stopping to highlight his proposals to help middle-income Americans, including his health care program and funds for education and training (Bloomberg).
• Earnings before the open -- ANF, DLTR, GME, HRL, PLCE, ROST, SHLD.
• Earnings after the close -- ADSK, ARO, ARUN, GPS, MENT, MRVL, P, SLH.