I will summarize today's trades first thing in the morning, in Morning Setup.

• I'm staying very active this evening.

I'm just too active right now to recap.

• Break in!

It was a more or less in-line third-quarter earnings report for Intel (INTC). Very good guidance on revenues, gross margins and the like for the fourth quarter, though.

• My mantra for now: Take short-term rentals, not long-term leases.

Market has no memory from day to day. No.

Market has no memory from hour to hour. No.

Market has no memory from minute to minute. Yes

Err on the side of conservatism.

Maintain above-average cash returns.

Trade opportunistically.

Put investments on the back burner for now.

Thanks for reading my diary today. Enjoy the evening.

And if you can, please say a special prayer for Uncle Vinnie.

• As of 3:47 p.m. EDT, $650 million to sell market on close.

• I'm taking my SPY long rental off for a quick $0.90, now at $188.20.

• I added to SPY at $187.25.

• I took a small long rental in SPY at $187.30 just now.

• On today's market close:

Fool me once, shame on you.

Fool me twice, shame on me?

• What does today's oil decline mean?

The big story today is the near $4-per-barrel drop in the price of crude oil. I have no idea what this might mean for the markets.

On one hand, it's a tax cut for the consumer and should be a catalyst toward stronger domestic economic growth (but bad for bonds).

On the other hand, the markets might continue to lose the important energy sector, or it might portend a global recession.

That said, tomorrow's opening missive will ask the question: "Are We Headed for a Recession?" 

It's an interesting and complicated question.

• I am putting Apple (AAPL) back on my Best Ideas list as a short.

• I doubled by Apple (AAPL) short this morning.

Just when I thought I was out, they pull me back in. -- Michael Corleone, The Godfather Part III

Overnight I gave some thought about the rationale behind covering most of my Apple short (for a profit) over the last two weeks.

I should add that I spent about five hours at the Apple, Sprint (S) and AT&T Wireless stores in West Palm Beach, Fla. kicking the tires over the weekend.

Bottom line, I  am sticking with my bear thesis and I stand by my Apple call and I doubled my Apple short this morning.

• Reshorting JPMorgan Chase (JPM) vs. Citi (C) long.

I am moving back market neutral in the banking sector by reshorting JPMorgan against my long of Citigroup.

JPMorgan's shares have rallied by more than $1 from the morning's lows and I reshorted at $58.27.

I will deliver my analysis of C's excellent quarter tomorrow morning.

• More from Sir Arthur Cashin.

S&P rallied to just under resistance (high 1898.71).  To put some perspective on the bounce, the high took you back to 3:00 p.m. yesterday.

Run rate heavier and at 12:30 projects to an NYSE final volume of 920 ¿ 1 billion shares.

Action in final two hours could be critical.  Airlines trade like Ebola cured

• Midday musings from Sir Arthur Cashin.

We'll see if the post-Europe close bounce effect shows up today and takes us toward S&P resistance at S&P 1900/1908.  Shorts not panicking yet.  Gundlach said to have said that Alibaba IPO put in market's high for the year and that 2.20% is low for ten year yields.

I trade leveraged ETFs -- but I don't hold leveraged ETFs for extended periods of time.

I often receive emails asking me for an explanation of this view, so here we go:

Leveraged ETFs can be viewed as a good tool for short-term trading, but most investors should not hold them for long periods as the "decay effect" will hurt the performance of the fund.

The "decay" in a leveraged ETF is a function of the daily "resetting" of the levered ETF. The net asset value (NAV) of the ETF effectively starts from zero each day and adjusts by the leverage amount from the previous day's close to the next day's close. In short, it is not the performance from one set price at one set time times the leverage amount, but the sum of the daily reset values in percentage terms from one day to the next.

 In one-directional markets, this benefits the investor as leveraged ETFs can yield superior results (usually on a short term basis). However, in a whipsawing market, this resetting effect will hurt the investor.

For those who want to get more technical, here's more.

Leveraged ETFs are known for their natural decay. On the long term, holding a position in an N-times leveraged ETF is generally worse than holding an N-times leveraged position in the underlying asset. But few people really understand the reason, which is called beta-slippage.

To understand what beta-slippage is, imagine a very volatile asset that goes up 25% one day and down 20% the day after. A perfect double-leveraged ETF goes up 50% the first day and down 40% the second day. On the close of the second day, the underlying asset is back to its initial price:

(1 + 0.25) x (1 - 0.2) = 1

And the perfectly leveraged ETF?

(1 + 0.5) x (1 - 0.4) = 0.9

Nothing has changed for the underlying asset, and 10% of your money has disappeared. Beta-slippage is not a scam. It is the normal mathematical behavior of a leveraged and rebalanced portfolio. In case you manage a leveraged portfolio and rebalance it on a regular basis, you create your own beta-slippage. The previous example is simple, but beta-slippage is not simple. It cannot be calculated from statistical parameters. It depends on a specific sequence of gains and losses.

In a trending market, beta-slippage can even become positive. Let's go back to the math: the simplest trending market is two consecutive days in the same direction. Imagine an asset going up 10% two days in a row.

On the second day, the asset has gone up 21%:

(1 + 0.1) x (1 + 0.1) = 1.21

The perfect 2x leveraged ETFs is up 44%, more than twice 21%:

(1 + 0.2) x (1 + 0.2) = 1.44

A leveraged ETF in a steady, bullish trend may outperform its leveraging factor. But it all depends on the sequence of losses and gains, and it cannot be predicted or even calculated with a statistical model.

Therefore, trade leveraged ETFs... don't hold them!

• I intensified my Monitise (MONIF) buying today.

Nothing new fundamentally.

Next potential catalyst are the November analyst days in London and New York City.

• Time to buy a small stock.

For the eighth out of the last 10 days, I am adding to Monitise.

• Attractive return vs. limited risk

I am again bidding for all 14 closed-end municipal bond funds I own.

Here again is my case for the asset class. 

• I'm taking a breather from it.

I consider myself a fast, adaptable and facile trader.

But the markets' minute-to-minute moves are so spastic and random, that I am going to step back a bit and watch for now.

Err on the side of conservatism. Again.

• Recommended viewing.

As a Woodstock Festival attendee I couldn't help but highlight one of my favorite segments ever on "Mad Money," in which Jim "El Capitan" Cramer interviews Neil Young.

I know a bit about Neil through my oldest pal and Wharton roommate Pablo, who has spent a lot of time with Neil Young -- as both are major collectors of antique train sets. (I believe Neil Young ultimately purchased a portion of Lionel Trains out of bankruptcy years ago!) 

Pablo and Jimmy have told me wonderful things about Neil Young as a father, a collector, an innovator and (of course) as a musician.

Lets s'hare Jim's experience with Neil Young and go to the tape!

• The stock jump after the earnings beat.

Nice win for all of us on the Citigroup beat (analysis to follow).

With the shares now +$1.50 I am selling off yesterday's add-on. I am maintaining my core position and the bank on my Best Ideas List.

I have consistently had an outside of the consensus negative view on autos this year and I have and continue to be short General Motors (GM) and Ford (F).

I got a lot of pushback in part because industry sales were moving along well, and in light of the fact that several well-regarded hedge funds had outsized long positions in the group.

Yesterday, the auto sector made new yearly lows.

This morning Goldman Sachs (GS) downgraded the auto sector. Here's what the analysts said:

"The US Autos sector has staged a remarkable recovery since the Lehman Crisis seeing annual car sales rise from mid-single digit lows to a current pace of 16.4mn units. But today, Pat Archambault lowers our 2015 sales growth forecast to 0% as we believe stricter regulation of sub-prime auto lending combined with the recent surge in incentives is likely to cause a stall-out in Autos growth as we detail in "Repositioning for a slower growing world". Globally, we also expect aggregate light vehicle volume growth to slow down to 3%/3.8% in 2014/2015 versus earlier expectations for 4.2%/5.9%. We also make outright cuts to Latin America on steeper demand deterioration. Europe remains a focal point, with a weakening macro backdrop offsetting what have otherwise been decent auto sales.

Rating Changes:

• We upgrade BWA and DLPH to Buy from Neutral as the recent sell off provides an attractive opportunity to buy product cycle stories and gain exposure to businesses which should outgrow the industry in the late stage of the cycle.
• We downgrade Ford and Lear to Neutral from Buy on lack of near-term catalysts and a softer growth outlook respectively.
• We remove GT and GM from our CL-Buy List but maintain Buy ratings."

• Buy the rips, sell the dips.

The rundown:

• U.S. futures are gapping higher   after yesterday's schmeissing . (S&P 500 futures are +11 and Nasdaq futures are +29 handles).
• Europe is broadly lower ¿ down by about -0.60%.
• Japan is -2.38% after Monday's holiday. Little Japan-specific news. Every major sub group was lower. Energy, telecoms, tech, health care, discretionary, financials, utilities, and industrials all lagged. Tokyo Electron, ANA Holdings, Tosoh Corp, Mitsui Engineering & Shipbuilding, Mitsui Chemicals, IHI Corp, and SUMCO all were among the weakest components of the Nikkei. The Yen  surged ~75basis points on Monday and is flattish today.
• China is down 0.28%. Again, little in the way of news. All the major sub-groups closed lower, although discretionary, staples, HC, materials, and utilities all lagged. 
• Foreign exchange action is pronounced, with the US Dollar + 0.21% and the Euro -0.82%. As I mentioned over the last few months, look for some multinationals to disappoint in 3Q in the face of exchange headwinds and weakening exports.
• Gold is +$4/oz. Crude is down another $1. Copper is +0.64%.
• The yield on the 10-year U.S. note is down another four basis points to 2.21%. Sovereign debt yields are mixed to higher.

Global markets started out weaker, but are now improving. Comparison to Europe during the volatile summers of 2011 and 2012 are common place. Sentiment has deteriorated (see my previous opening missive).

It wasn't a  busy night/morning of news but a handful of underwhelming earnings in Europe (Michael Page, Burberry, Mulberry, and SABMiller all disappointed) along with more sluggish eco numbers (eurozone IP, German ZEW, etc) are putting pressure on risk assets over there.

Banks are the focus over there with earnings of C (beat -- I added yesterday), JPM (missed) and WFC. After the close we hear from CSX, INTC, and LLTC (LLTC may be the most interesting of all, given it is most similar to MCHP and thus will either refute or confirm that co's recent profit warning). 

Yesterday I traded quite actively -- and in the aggregate expanded my net short exposure. I became more aggressive later in the day. Here is my last post of the day:

"It's really tough for me to keep up posts on a current basis when I am trading so aggressively -- like Friday and today.

I try to be responsible in my assignment and transparent, so please "bear" with me during hectic periods like we experienced over the last week.

But let me briefly summarize my trading today.

I took in some of my Apple (AAPL), Lincoln National (LNC) and MetLife (MET) shorts.

I added to Monitise (MONIF), Oaktree (OAK) and Citigroup (C) longs.

I took additional long rentals in SPDR S&P 500 ETF (SPY) and PowerShares QQQ (QQQ) in the morning weakness.

I sold out all of my Index long rentals on a scale into the sizeable midday ramp.

Around 3 p.m. I began to reload on my ETF shorts as the market started to roll over.

I just covered the aforementioned shorts.

And I just took a small long rental in QQQ at $92.84 and in SPY at $187.15.

My stops, as always in a "fast market," are tight.

I remain of the view that we made "The Ali Blah Blah Top" for the year and I remain bearish.

But as an opportunistic trader I recognize that stocks don't fall in a straight line."

This morning I sold my ETF long rentals on the gap higher to take in a nice gain overnight. I sold SPY at $188.45 and QQQ at $93.60.

Buy the rips, sell the dips.

• Exiting these positions for a gain.

I am selling out my SPY and QQQ that I purchased after the close yesterday for a nice gain. SPY sold at $188.44 and QQQ at $93.60.

• A tradable bounce may lie ahead

The old axiom on Wall Street says that investors should sell on Rosh Hashanah and buy on Yom Kippur. It appears to be based on the view in the Jewish religion that Jews should be free as possible during this 10-day period of reflection and self-appraisal of the distraction of worldly goods.

Based on Bespoke's analysis below, there seems to be some truth to the phrase. The table below (I don't have the 2012,2013 returns) shows the historical performance (2000-2011) of the S&P 500 from the close before Rosh Hashanah to the close on Yom Kippur. As shown in the table, the S&P 500 has averaged a decline of 1.35% during the period with positive returns in only five out of 12 years (42%).

The large drawdown in 2008 does skew the returns, however. 

Looking at the median return instead shows that the S&P 500 declines a much more modest 0.41% during the period. Still negative, but not nearly as bad."

--Kass Diary, "Sell Rosh Hashanah and Buy Yom Kippur," Sept. 24 

We all know the market axiom, "Sell on Rosh Hashana and Buy on Yom Kippur" (see above).

It's not working this year.

But what might work over the remainder of 2014 is: "Selling on the first day of Rosh Hashana and buying on the last day of Sukkot."

Sukkot is the holiday in the Jewish religion that commemorates the 40 years of Jewish wandering in the desert after the giving of the Torah atop Mt Sinai. The holiday is celebrated five days after Yom Kippur, and is the only Jewish festival associated with an explicit commandment to rejoice -- in the bounty of the Earth during the fall harvest. 

According to my pal Tobias Levkovich, strategist with Citigroup, Sukkot's last day -- called Hoshana Rabbah -- is tomorrow! 

In support of this view, and on a positive note, the recent market schmeissing appears to have moved markets into a deep oversold and into a capitulatory phase that could set the stage for a tradable bounce over the near term.

The sharp climb in the CBOE Volatility Index (VIX), the growing negative investor sentiment, and even developing fear could sow the seeds of a better U.S. stock market.

According to SentimenTrader, there has been six times that the VIX has jumped 60% or more over the course of three days ¿ Oct. 19, 1987, Oct. 13, 1989, Aug. 6, 1990, Feb. 27, 2007, May 6, 2010 and Aug. 8, 2011. Every time, stocks rallied over the next two days. Four of the six times, the jump marked the end of the decline for stocks. The other two (in 1990 and 2007) saw stocks rally five to seven sessions, and then they rolled over to new lows. This suggests that traders' reaction to the coming bounce is of paramount importance. History shows that, if stocks subsequently roll over to new lows, a much more severe decline is likely.

On a separate note, market sage Laszlo Birinyi points that, as of last night, 64% of market bloggers are bearish and only 9% are bullish now.

Sell on the first day of Rosh Hashanah and buy on the last day of Sukkot?

The bounty of a fall investment harvest may lie ahead!