• Break in!

Today I delivered a lukewarm update on Potash (POT), citing a lower-than-consensus 2015 projection relative to consensus

Agrium (AGU) just guided lower and I expect POT shares to move towards the lower end of my projected range (for the balance of 2014).

• Housekeeping item.

I am out of my GoPro (GPRO) puts -- the stock acts too well.

I will revisit in the next few days.

• $325 million to buy market on close.

• The Put Call Index is now sending a buy signal. 

The circles in the chart below indicate that the Put/Call Ratio is now around 120. (The yellow line is the SPX index).

The vertical lines are to indicate the correlation of the Put/Call Ratio and the SPX showing it has been a good time to buy in the past two years.

Source: Bloomberg

View Chart »View in New Window »

• Two recent postings have relevance to today's action.

I want to close the day by linking to two recent posts -- How Now Dow Jones? and Prepare For the Next Minsky Moment -- that have increased relevance to today's market schmeissing.

• News on GM share repurchases.

General Motors (GM) doesn't expect any share repurchases in the next 12 months.

• Trades and bids.

 I did little today.

I covered yesterday's SPDR S&P 500 (SPY) and PowerShares QQQ (QQQ) shorts this morning for a nice gain. Today, I shorted QQQs in the premarket and covered for a gain of close to $0.65 in the late morning. 

I am in process of reestablishing my bond short and added to my ProShares Short 20+ Year Treasury (TBF) at $27.38.

I added small to Monitise (MONIF) at an average price of $0.4860 and to Bon-Ton (BONT) at $8.30.

I sold some of my GoPro (GPRO) puts for a profit. 

I continued to bid for all 14 closed-end municipal bond funds but, on average, about a nickel below the market, my bids were not hit.

• The activist firm plans to shut down. 

Activist Relational Investors (with $6 billion in assets) to close down.

Relational holds 16.2% of Guaranty Bancorp (GBNK), 15.2% of Magnum Hunter Resources (MHR), 14.3% of SPX Corp. (SPW) and 11.7% of PMC-Sierra (PMCS).

• David Tepper's views on Pimco, the economy and the NFL.

Appaloosa's David Tepper appeared on Bloomberg TV today and discussed a wide array of subjects, including Bill Gross, Roger Goodell, and the outlook for the U.S. bond and stock markets.

Tepper said that price-to-earnings ratios for U.S. stocks aren't high and that junk bonds are at the mid-point of fair value:  "The U.S. economy is pretty good, stocks are not at high multiples right now." He also said: "I wish I didn't have any investment" in Fannie Mae (FNMA) and Freddie Mac (FMCC).

On how Bill Gross' departure from Pimco will affect the bond market, Tepper said: "Nothing. Who cares? ... You saw it the other day. The little bit that was done with the corporate markets ... It's not going to mean that much ... The market is the market. It's bigger than anybody."

Tepper, who owns a 5% stake in the Pittsburgh Steelers, was asked about Roger Goodell and the NFL's handling of the Ray Rice situation, saying: "I actually like my job better than his right now ... [Goodell] should be more sensitive and potentially be making some donations ... That's one thing he should be doing and it hasn't been done yet ... I think he should be reaching into his pocket and just doing that, like any player in the NFL would be doing if they committed something."

Let's go to the tape. 

• More musings from Sir Arthur Cashin.

They are pushing through the support band but no trapdoor effect yet. Volume actually decreased a touch on latest move down.

Last line in the sand that I can see is a rising trendline at 1949/1950, connecting a former series of rising lows. Various influences but primary is internal technicals.

• My conclusions were negative on the government-sponsored agencies. 

A lot of the research work I do and present on Real Money Pro you don't even see because I reject the ideas after a lot of analysis and leg work.

Case in point: Fannie Mae (FNMA).

FNMA (long) was called to my attention by 3-4 very smart and successful (and rich) money managers.

As a result, I probably spent a full two weeks on the government-sponsored agencies such as FNMA and I decided to pass on the group, which was very popular (on the long side), particularly in the hedge fund community.

I passed on the ideas as my research conclusions were negative and I concluded the reward vs. risk was unattractive.

And that was very fortunate considering the share price action over the last month!

http://finance.yahoo.com/q/bc?s=FNMA+Basic+Chart&t=1m

• GoPro (GPRO) put position today starting to work.

• Consider another thing.

Late in the day yesterday, I was able to short SPY at $197.30 and QQQ at $98.88.

SPY is now $195 and QQQ is $97.40.

• Again for emphasis

Err on the side of conservatism. It is no time for heroes.

Time for opportunistic trading.

Consider the Six Peaks.

• Talking subprime autos?

I sense that "Fast Money" gang is about to discuss subprime auto lending risks.

I wrote three columns on this on Real Money Pro today.

Here, here and here.

• Midday musings from Sir Arthur Cashin.

The battle is joined. Bulls need to defend the 100 EDMA (circa 1953/1955). Resistance is at the broken support band (1962/1965). Russell looking a bit washed out. 

Little early for run rate but if pushed, it looks 760/840.

• An obvious area of concern.

Apropos to my post on the unsustainable growth in subprime auto loans, I wanted to add that Janet Yellen and Stanley Fisher have hinted at the use of "selective" credit controls as a preferred policy to blunt interest rate policy.

Subprime auto loans are an obvious area of concern. 

• Monitise's (ONI.L/MONIF) Investor Relations sent this to subscriber Kingfish:

As a reminder as we transition to a product-led subscription based business we will be generating revenue as follows:

1) by the sale of our mobile banking platform and services to financial institutions where they pay us typically on a subscription basis

2) and in the future augmenting this subscription revenue with a share of mcommerce lead generation revenues from transaction that run over our platform. Say for example if a customer in the future purchases a gift card over their mobile banking app, we then get a % commission from the gift card company for having helped drive that sale, we in turn share that commission with the bank, which means a new revenue stream to them(our bank customer) and us.

Our 200m target is based on use of our mobile banking and mobile commerce offering.

Regards

Monitise Investor Relations

• Six Peaks to Consider:

1. Peak Autos
2. Peak Housing
3. Peak Hiring
4. Peak Stock Market
5. Peak QE
6. Peak Complacency

• First time, hopefully not the last time!

I covered some of my GoPro (GPRO) puts on principle -- just so I can write that I made a small profit!

I'll add on any strength in the common.

• From Sir Arthur Cashin:

Beware -- rumormongers are out and about. While ISIS remains a favorite, the new deal is Ebola -- everything from claims of new victims to industries that could suffer if full scare breaks out, like airlines and amusement parks.

Selling accelerates as stocks drop through support. Russell takes out 1100 and hits lows near mid-May.

Asset scan sees some aspects of geo-political flight to safety -- gold and crude higher, while 10-year yield plunges.

Run rate later.

• GM confirms my thesis.

GM (GM) says U.S. subprime auto loans have increased to 7.9% in 2014 from 4.7% in 2010. This is part of my bear thesis on peak autos.

• The Lindsey Groups' Peter Boockvar on the ISM report:

The September ISM manufacturing index fell to 56.6 from 59 in August and was below the estimate of 58.5. After jumping in the two prior months from 58.9 to 66.7, new orders fell back to 60.0 and backlogs moved back below 50 to 47.0 from 52.5. Inventories at the manufacturing level, which were an issue in yesterday's Chicago figure, fell .5 pt to 51.5 and is in line with the 6 month average. Customer inventories remained lean, falling 4.5 pts to 44.5 and has been below 50 since 2011. Employment fell 3.5 pts to 54.6 and is back below the 6 month average of 55.2. Export orders fell 1.5 pts to 53.5 and is also back below the 6 month average of 54.9 in light of the goings on overseas. While commodity prices keep falling, prices paid rose 1.5 pts to 59.5, matching a 4 month high (wage pressures?). Of the 18 industries surveyed, 15 saw growth. The ISM said this about the September survey, "comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest." Bottom line, while moderating m/o/m, at 56.6 the ISM index is still above the one year average of 55.5 but the difficulty in comparing time periods in a diffusion index and let alone relying so heavily on them is that the survey is ONLY measuring the direction of change, not the degree. Also, the comment on labor shortages also points to a labor market that is getting tighter and thus leaves the Fed less room to take their time. But, the overseas economic challenges seem to be growing.

• Shorted two more Best Ideas (short): MetLife (MET) and Lincoln National (LNC).

• For those of you who've asked:

I am not yet re-entering iShares China Large-Cap (FXI).

And regarding my conviction level, I purchased a lot of Monitise (MONI.L/MONIF) in the past two days.

Just so you know -- but that doesn't mean I'm correct!

• My expectations going into next year.

As promised, I intend to describe my specific price expectations (for the balance of the year) of each of my long positions on my Best Ideas list. The forecasts that I make are within the context of a cautious/negative market view and are based on the expectation that stocks will move lower over the remainder of the year.

I would warn that these price expectations are guesstimates and are not meant to be precise. That is the reason I will not give a price target, but rather upside/downside for each equity.

I have previously discussed Best IdeasMonitise (MONI.L/MONIF), my bond short, and Ocwen (OCN). Today, I'll briefly update Potash (POT).

While I am maintaining Potash as a Best Idea, I have recently pared back some favorite core investment longs, including Potash. I expect the shares to trade in line with the markets and to be in a narrow range over the balance of the year, perhaps between $33.50 and $36 (an even upside/downside ratio).

I anticipated a slight beat to consensus for the third quarter of 2014 EPS at about $0.45 per share vs. expectations of $0.42 per share on better recent ammonia prices and potash positioning, which could move the stock closer to $36.

Fiscal 2015's outlook remains uninspiring, and my earnings forecast of $1.95 to $2 per share lies slightly below consensus of $2.09. (There is a lot of variability to results, so I don't see this as consequential). At the core of my lower projection is a bearish North American grain outlook (contained in Monday's grain and stocks report). The removal of Brazil's import tax on Russian fertilizer imports represents another forward risk.

Though the next six to nine months remain uninspiring, beyond next year the long-term attraction of Potash remains intact. Commodities stocks, now out of favor, should return to being in favor by 2016-17.

I expect Potash's share price to improve by the second half of 2015 and possibly trade up into the $38 to $42 range. 

• Short the rips cover the dips

I covered my SPDR S&P 500 (SPY) $195.75 and PowerShares QQQ (QQQ) $98.02 shorts for a nice profit from Monday. Back to market neutral.

• A couple of buys.

Picking small at more Bon-Ton Stores (BONT) below $8.30.

Also, as I mentioned in the "Market Setup," the recent drop in 10-year U.S. note yields has created a better entry point and reward vs. risk on my short bond thesis. After selling a lot of my ProShares Short 20+ Year Treasury (TBF) when the yield hit 2.65% I am back buying TBF at $27.48 with yield down to 2.47%.

• I am bidding for more GoPro (GPRO) puts now.

• I see a change in the market's complexion.

Monday's late afternoon shorts are working out well; indeed, shorting any rip has worked for the last two weeks. I see a change in the market's complexion.

• A second case in the U.S.?

I've seen unsubstantiated tweets of a second Ebola case in Texas, and now this from Zero Hedge.

• Mark Grant chimes in, too:

I remain fundamentally bearish on the European Union's economies and hold to the view that this weakness (and other factors) will take down consensus S&P 500 profit forecasts in 2015-16.

This morning, Sir Mark J. Grant addressed the European economic crisis:

To understand what is happening in Europe you have to step back from all of the hyperbole and engineered press releases that are bandied about in the European Press as factual. The EU probably has the biggest army of "information directors" on Earth and the added advantage of being able to get country after country, within its borders, to announce the same pieces of information one right after another. These acts of repeated statements adds credibility to their stories and makes everything appear to be real when "real" is just what they want you to believe.

You may think this is no different than any other government but, in my opinion, this is not quite accurate. The European Union, by its construction and design, places their Union and their member countries in a much more controlled position than, as an example, the United States. Anything and everything is rationalized as benefiting the EU and their nations and whether the manipulation of data or the manipulation of the methodology to account for it, the stability of the European Union places their own dogma high above the accuracy of either. This has been demonstrated time and again and you only need to consider their bank stress tests to realize just how they operate.

For the last seven or eight years they have pushed and prodded their currency ever higher against the American Dollar. This was not just a matter of ego. They did this for two basic reasons and one of which was to convince the world that their currency could be used as an alternative for the Dollar in settling international contacts. It took time but this plan worked well enough. The other reason they did this had to do with the cost of energy and oil and the scheme was also successful in this operation.

Allow me to explain what you will not see printed almost anywhere. Oil, for years, has been traded in Dollars. This has meant, to use a simple example, that if Oil was at $100/barrel and if the Euro was at 1.30 to the Dollar that their cost of oil for Europe was discounted by 30% because of their currency. Since Europe does not produce anywhere near the oil it needs this has been a major benefit to the entire Continent. The flipside of this equation though has been that their exports were more expensive but then for years they determined that the price of energy outweighed, was more important economically, than the cost of their exports.

Then things slowly changed. The Dollar, while still the world's reserve currency, became less so as the Euro became more accepted. Oil which still predominately trades in Dollars is also now frequently traded in Euros and so what the Europeans had accomplished began to have less of an impact on their costs of energy. The Europeans then did a re-think, ran the numbers, and concluded that the Euro to the Dollar valuation was now a negative as their loss in the exports column no longer was made up in their profit in the cost of energy column. There is more to it than that but this is the basis of what has taken place. So now they are slowly, effectively, grinding down the value of their currency against the Dollar in moves made by the ECB and each separate central bank in Europe.

It is right here, right at this exact point, where so many people have so much difficulty. They just do not want to believe that the central banks of the world can exercise that much power and influence over the markets. They don't want to admit it to themselves and they certainly do not want to admit it to their clients. Yet, sadly enough or happily enough, there is the truth of it and that is that the central banks of the world now are in great control of the world's markets and the prices of equities, bonds, gold, currencies and you name it. Pick a market, any market, and what we refer to as free enterprise has mostly lost its grip but that is where we are so there is little value in arguing over what has taken place. You just have to adjust to the new reality and get on with it.

There are countless examples that could be given to support my viewpoint but we can start with Italy. The country has had almost no growth for thirteen years. According to International Monetary Fund data, Italy's gross domestic product, adjusted for inflation, posted no growth between 2000 and 2013 while the American output was up 25% over that time period. According to the EU's own statistics agency Italy now has a -0.2% deflation rate for the last twelve months which is ringing alarm bells in the capital of Europe. Yet the Italian ten year is yielding 20 bps LESS than its American counterpart. Does it make any economic sense, ah no, but it does make sense when the actions of the ECB are considered; oh yes!

When you look at the balance sheet of the ECB you only see a very small part of the real story. Behind what is released are the balance sheets of every central bank of every country that belongs to the European Union. Numbers aren't released for many of these countries but I believe it is a quite educated guess that the accumulated balance sheets of the European central banks dwarves the amount of assets now held by the Fed. So the ECB lends money to its banks at 0.05%, creates the biggest carry trade on earth, and pushes, pulls, prods, encourages, forces, and pick what words you like so that these banks buy European sovereign debt and force down the yields on the debt of their member nations. The strategy has worked well enough but the outcome has not been what has been hoped. Europe is mired in a recession with barely any inflation and the economies of Europe, which are accurately NOT reflected in their bond prices because of the ECB's manipulation, has not gotten the job done. Though, I would say, one can only imagine just how bad things might really be if the ECB had not engaged in their machine tooling of the European bond markets.

The ECB is about to become a "Bad Bank"

The third round of the European bank stress tests were scheduled to be announced months ago. No such announcement has been made though. I believe it is because the ECB went into all of the banks, ran their own numbers, compiled their own data and promptly threw up in Frankfurt.

The first round of the European bank stress tests was flawed by inaccurate data. The second round was flawed by an inaccurate methodology; the manner in which the numbers were counted, and now Mr. Draghi and Co. is up against the wall with investors to provide accurate information. So they have found a way out because some way must be found out of this dilemma as the two most convenient methods of lying have already been used.

So the new, new plan is to buy assets from the European banks before the stress tests are announced and effectively hide what had been in those banks. The German central bank has gone ballistic in opposition but they stand virtually alone as the ECB is about to assume billions of Euros of junk loans including those from the banks in Cyprus and Greece. The Financial Times reports this morning that Bundesbank president Jens Weidmann has already objected to the plan along with Wolfgang Schäuble, Germany's finance minister. It will not matter. Germany is in a very isolated position now and is backed into a corner by France, Spain, Italy et al.

The ECB, in fact, is about to become a "Bad Bank" and hold assets that have little value while handing cash to the European banks an grossly inflated valuations to try to save their banking system. It is a "Hail Mary" play of sorts because nothing else is working very well. Unemployment remains high across the Continent, business is stagnating, commercial and personal loans are not growing, 2.00% inflation is a dream and, in my opinion, the Continent is in far worse shape than any politician is admitting.

You cannot play any of this though in the markets. If you do you will get crushed. The ECB and its minions hold trump cards that you can barely imagine and no private institution has the fire power to take the opposing bet.

The central banks are in control and that is just the way of the world at present.

Where next?

The ECB will play their asset-backed purchase card in the next few weeks. This is their second to the last trump card in my estimation. However the size of this card and the scope of what it will achieve is not nearly large enough in my estimation. Once again it will help but it will not cure the European economic crisis.

Soon enough, against all of the German opposition, the ECB will play its final trump card which is Quantitative Easing. Here is the mutualization of European debt which Germany has for so long forbidden. QE has one definition in America given our make-up of States but a very different definition in a union of starkly different nations. Quantitative Easing may well help France, Spain and Italy but it will pull Germany down with an equal but opposing force. QE will be a huge game changer for the Continent and the results of it, six months out, is anyone's guess.

America---On the Flipside

The grind-down in American yields is virtually assured in my opinion regardless of the comments of the media soothsayers. Terrorism, geopolitical events or a brawl in China could send them down much more quickly. Quantitative Easing in Europe will also have intended and unintended consequences that will stress all of the markets as Europe wallows in more and more and more debt.

Will there be a "Lehman Moment," maybe but probably not. Though I will say that just the "maybe" of it is enough to cause some concern.

"When a hookah smoking caterpillar has given you the call

When the men on the chessboard get up and tell you where to go

When logic and proportion have fallen sloppy dead

And the White Knight is talking backwards and the Red Queen's off her head

Remember what the Wizard said!"

--Apologies to Gracie Slick

• An analysis from BTIG.

On Tuesday I added to my Monitise (MONI, MONIF) investment, based simply on price and on my perception of the attractive reward vs. risk. 

In this morning's research, BTIG refutes a bear argument against Monitise and explains why Visa (V) can afford to move its mobile development in house, while a "go-it-alone" option is less feasible for most banks. The analyst also explains -- and this is something I have written about extensively -- the importance of Monitise providing a market agnostic backbone in outsourcing a mobile strategy:

The bear case on Buy-rated Monitise (AIM: MONI; OTC: MONIF) in the aftermath of Visa Inc.'s (V ¿ Not Rated) revelation of its intention to eventually move its mobile system development in-house holds that the company will be squeezed out by larger payment processing companies that have the resources to create their own technology from scratch.

We believe it is the embrace of this bearish view that has been the primary driver of the recent weakness in MONIF shares. And the downdraft has been exacerbated by confusion about what the launch of Apple Pay could mean to the company's growth prospects.

But does the bearish view actually have merit?

In our view, the selloff that followed Visa Inc.'s announcement and the weakness that has persisted has been unjustified insofar as the sellers have been overly focused on the size of the financial institutions that can afford to go it alone on mobile technology. What they have been overlooking is the reality that a much larger number of banks ¿ over 7,000 in the U.S. alone, and many more globally ¿ are simply not big enough to justify the in-house approach, but cannot afford to fail to adapt as customer preferences shift from branches to mobile and online banking.

And don't forget the larger banks ¿ most recently Santander, the largest bank in the Eurozone by market capitalization, as well as the largest U.K. banks and five of the 10 largest U.S. banks ¿ that obviously have the resources to develop mobile technology in-house but still found the value proposition offered by MONIF compelling.

When BTIG Buy-rated Apple (AAPL) announced the launch of Apple Pay, it was disclosed that large U.S. banks such as Bank of America, Citigroup, JPMorgan Chase and Wells Fargo had partnered with the technology company in the new scheme. As American Banker noted on September 17, "Apple Pay is sparking concern that smaller banks will be left behind in the mobile payments revolution."

One of the bankers quoted in the American Banker article was Patrick Frawley, CEO of Community & Southern Bank, an Atlanta-based bank with $3.1bn in assets, who expects large banks to spend heavily to develop state-of-the-art mobile technology.

"We've got to keep up with that," Frawley said.

MONIF, having spent a decade focused on the development of bank-grade technology and now bolstered by IBM's (IBM ¿ Not Rated) cloud security, is uniquely positioned to help small- and medium-sized banks lacking the resources or capability to develop their own mobile platforms to level the playing field relative to their larger peers. For these banks, outsourcing mobile development to a well-established third party simply makes sense from both a technical and financial perspective.

As far as Apple Pay is concerned, we believe some confusion exists about what it is relative to what MONIF does. Apple Pay is a payment scheme that is built upon existing payment schemes. In contrast, MONIF is not a payment scheme, and the company is not trying to create one. It is focused on providing mobile banking products to banks, and will eventually augment its business model with revenue derived from mobile commerce.

MONIF is agnostic with regard to payment scheme and can develop applications related to whatever schemes its bank customers choose to connect to, which could include Apple Pay. (However, as we noted in a blog post on September 22, the global market share of AAPL's iPhone was only about 11.7% in June, so the real extent of Apple Pay's global reach needs to be kept in perspective, in our view.)

Another question that has continues to pop up in the wake of the Apple Pay launch is what the increased adoption of near field communication (NFC) technology promoted by the new payment scheme would mean for MONIF. We believe that if AAPL's scheme does result in more prevalent use of NFC, the opportunity set for MONIF will expand significantly. With that said, the company is agnostic regarding the form of payments acceptance at the point of sale (including QR codes and other means) as well as other forms of mobile payments such as bill pay and peer-to-peer transfers.

• Did a $600 billion fat-finger trading error slam the Nikkei?

We're witnessing the rising role of electronic-based trading, algorithms and high-frequency-trading (HFT) momentum-based strategies in our markets -- and this against a backdrop of machines increasingly controling our markets' destiny. I have repeatedly suggested that this is a recipe for ultimate disaster.

If this story is correct it is yet another example of why we should "Kill The Quants Before They Kill Us!"  

This will all end badly. 

• From Peter Boockvar.

Here's The Lindsey Group's Peter Boockvar on more divergences, economic data and sentiment:

While the large cap indices were modestly lower yesterday, the internals again reflected major divergences going on in markets underneath the surface. As of yesterday's close, the S&P midcap 400 index (joining the Russell 2000) closed below its 200 day moving average for the first time since November '12. This could certainly be a one day event but is still another noteworthy sign that this is not your 2013 market which again I attribute the difference to the QE phenomenon being either on or off. As well known, I was never in the camp that a $1 Trillion annualized stimulus program going to zero can be pulled off without any repercussions. After all, the only reason why we had QE2, Operation Twist and QE3/4 is because QE1 and each one after didn't work in bridging us to anything sustainable other than a temporary stabilization. QE never will in fact create anything long lasting because what is giveth has to be taketh away. If only the economic cycle at least past QE1 would have been left to run its own course I wouldn't be worried about this. 

To my above point, Raghuram Rajan, the head of India's central bank who in 2005 said directly to US officials such as Greenspan, Bernanke and Summers that the US has a housing bubble on its hands, said this today in an interview about the developed world, "We have had ultra low interest rates for close to six years, and at some point you have dug a hole so deep in terms of asset prices that any attempt to get out of this has an immediate effect on asset prices." 

In terms of stock market sentiment with the divergences stated above and obvious to us all, the faith in central banks still reign supreme as Investors Intelligence said Bears on the week fell to 15.1 from 15.3, the 3rd lowest read in this bull market. Bulls fell .5 pt to 47.5 while the Correction camp ticked up by the difference of both to 37.4. 

The economic data overseas was mostly weak ahead of important data in the US over the next three days. The final EU manufacturing PMI was revised down to 50.3 from 50.5 to a 14 month low as Germany's index fell below 50 for the first time since June '13. France remained below 50 while Italy and Spain were above 50. The UK PMI fell to a 17 month low at 51.6 and markit.com attributed it to "the ongoing lethargy of the euro zone." 

China's main manufacturing PMI was unchanged at 51.1 but 5 month lows were seen in new orders and backlogs. There were m/o/m declines seen in the PMI's of South Korea, Taiwan and India. Indonesia moved up a touch to back above 50. The Japanese quarterly tankan report was mixed as large company manufacturing rose q/o/q but large company services, small company manufacturing and services and the outlook for both big and small manufacturing and services fell. The Nikkei fell .50% overnight.

• Where it began.

Last week, the S&P 500 registered a rare display of volatility. The week contained both the largest 2 up days in the past month and the largest 2 down days. This was just the 54th time since 1950 that the 2 largest up and down days in the past month occurred in a 5-day span. ...

Historically, returns have been weaker than normal going forward, particularly in the short-term. The average 3-week return following these 5-day spans since 1950 has been a dismal -2.93%. More than half of all occurrences led to a negative 1-month forward return. . . . Since 1996, there have been 17 (displayed in the chart). Results following these 17 have been especially poor in the near-term. After 2 weeks, only 2 of the 17 occurrences showed a positive return and the 3-week average return is a putrid -5.56%.

--Dana Lyons' Tumbler

The rundown:

• U.S. futures are slightly lower: S&P 500 futures are down 2 points and Nasdaq futures are off 7 handles. Ebola fears seem to be the proximate cause.

• Europe is trending lower, and England is the weakest major market. Germany's purchasing managers index (PMI) dipped below 50.

• Nikkei is down 0.56%, reflecting weak overnight economic data and a bleeding Japanese yen (against the U.S. dollar). The PMI disappointed, while the Tankan corporate-sentiment survey was a bit more upbeat. Consumer staples and telecoms were the leading sectors, while energy and tech lagged. Sumco shares slumped nearly 7% after a UBS downgrade, and it was the weakest Nikkei component. Other laggards included Yaskawa Electric, Minebea, Itochu, Nisshin Steel, Mitsubishi Motors, Casio Computer and Sumitomo Heavy. On the upside, Oki Electric, MTN, Mitsui Engineering, Aeon and NTT Data outperformed. 

• Today is a holiday in China and Hong Kong. As a result, the protestors seemed to have increased in size.

• Foreign-exchange action settled down: The U.S. dollar is up 0.15% and the euro is down 0.23%. As I've mentioned recently, look for some multinational companies to disappoint in the third quarter in the face of forex headwinds and weakening exports.

• Gold is down $2 per ounce -- and seems to have a mission of breaking $1,200 -- while crude oil is up $0.34 per barrel. Copper is up 0.40%.

• The yield on the 10-year U.S. Treasury note is up 0.5 basis points to 2.48%. Sovereign-debt yields are mixed. For the balance of the year, I see yields bottoming at around 2.40% to 2.45% -- with upside at 2.75%. As a result, I might be nibbling back on the short side of bonds in the near term.

For a change, global stock movements are modest after a quiet night of news. Stocks are mixed to down so far Wednesday following a very quiet night. Other than the manufacturing PMI reports (China's figures came in slightly better than expected, while Germany was worse), there weren't any other major headlines.

In the U.S., the focus is on the ADP employment report, due out at 8:15 a.m. EDT, and on the Institute for Supply Management manufacturing index at 10 a.m. There's no Federal Reserve talk for a change. But New York Fed President William Dudley, Atlanta Fed President Dennis Lockhart and St. Louis Fed President James Bullard are all due to speak Thursday, and the next set of Fed minutes is scheduled for release next Wednesday.

General Motors' (GM) analyst meeting will be in focus today.

Autodesk (ADSK) and Canadian Pacific Railway (CP) are also holding analyst days.

It's light on the earnings front. 

I'm starting the day slightly net short.