• I actively traded during today's session.

I actively traded during the session, moving from a 25% net short position back to market neutral, and then back to 10% net short on the spectacular rise from the morning's depths.

Active trading like this is not for everyone but I plan to be opportunistic in my trading (all the while maintaining a cautious market view).

Though I do feel I have been too dogmatic in my view, I plan to continue to trade from the short side. But I plan to expand my long book, allowing for a larger gross exposure than I have had in the last few months, in keeping with the notion of a "two-way market" in which selected longs and shorts can be profitable.

That said, I added to several longs today, such as Bon-Ton (BONT) and Freeport-McMoRan (FCX), including a new position in Twitter (TWTR), with additions to energy longs Devon (DVN), Chevron (CVX) and Exxon Mobil (XOM).

Thanks for reading my Diary, and enjoy the evening.

• I am back to 10% net short.

• There is $300 million to sell market on close.

• Nice % rallies for BONT and TWTR from the day's morning lows.

• As I suggested, I re-shorted QQQ at $104.80 to replace this morning's cover.

I am back modestly net short.

• Doubleline's Gundlach sees 10-year U.S. note dropping to as low as 1%.

• I am heading out to a research meeting.

I should be back before the close.

• Nasdaq futures have recovered a breathtaking 50 handles. 

I plan to replace my QQQ cover on a scale beginning at $104.75-ish.

• Ocwen is trading a bit better today.

In fact, the shares were higher all day, even when the Dow Jones Industrial Average was down by nearly 200 points.

As I recently wrote, I am guessing that the company agrees to a settlement with New York State's DFS sometime in the next six weeks.

• From Sir Arthur Cashin:

Bulls failed to mount any meaningful rally after Europe closed.

Run rate at 12:15 projects to an NYSE closing volume of 810/890 million shares down from better than a billion indicated in the first sixty minutes.

• On weakness.

I continue to nibble on Bon-Ton Stores (BONT) on weakness today.

• I'm back to market neutral (I started the day 25% net short) for reasons previously given.

• I've taken a small long this morning.

If you go back to my initial analysis on Twitter (TWTR), I suggested that a buy level of about $32 per share was appropriate. Since Twitter's IPO, social media stocks have done well in the markets (though the sector has been weak in recent weeks).

At the current price of $36, down from $55 in mid-October, the shares likely have "economic value" to either Google (GOOGL) or Apple (AAPL), among others, in a takeover transaction.

As I have recently observed, call option activity has been conspicuous. Perhaps the recent management issues move up a possible "event."

Nevertheless, barring a "transaction," I have no illusion of strong relative performance through the balance of the year, but I am attracted to the developing reward vs. risk ratio and I have taken a small long this morning. I plan to add to TWTR on any weakness. 

• It's more of an investment.

I added (small) to Freeport-McMoRan (FCX) this morning at $24.57. I am not convinced on this name over the near term -- it's an investment.

• For two reasons.

I have covered a portion of my PowerShares QQQ (QQQ) for a (large) loss on this morning's weakness. I have taken my net short exposure to about 5% with today's trades. I remain cautious/negative on the markets, but I am doing this for two reasons.

First, I expect to have a better shorting opportunity in the days ahead. Second, my research duties have been out part of this afternoon, most of Thursday afternoon and all of Friday. Though I am ably assisted, the markets are too volatile to be an absentee short-seller or long owner! 

I want to be fully able to concentrating on my research responsibilities.

• I am further adding to my energy longs now, the third buying tranche in the last 24 hours.

In terms of weighting, I have gone from small to medium-sized now.

An investment position and possibly a trade (near term ) as well.

• More housekeeping items.

I covered a portion of my Apple short at $110.80 this morning (Note: After suffering for awhile I am now in the green in this short position).

That said, I am simply trading around the position. I suspect I will have better chances to re-short this name on strength, which is my intention.

Apple remains on my Best Ideas list (short). 

Here is my most recent update.

• But the positions are still relatively small.

I have further added to my energy longs this morning -- Devon (DVN), Chevron (CVX) and Exxon Mobil (XOM) -- in a still relatively small way.

My net short exposure is now under 15%.

• From Sir Arthur Cashin.

As 10:30 nears, they roll over to retest intra-day lows.

Strong suggestion that some of the selling may be coming from offshore, since the run rate of the first hour projects over a billion shares.  We'll see if it slows as Europe closes circa 11:30 (EST).

• To the investment-grade credit markets.

SPDR Barclays Capital High Yield Bond ETF (JNK) and iShares iBoxx $ High Yield Corporate Bond (HYG) are on my radar -- and they should be on the radar of every investor. 

Today, high-yield energy bond spreads are worsening, and are at record wides. This will importantly impact the economics of the companies -- even though investors, heretofore, have chosen to ignore the divergences between high-yield bonds and equities.

Beware of a contagion that could cause investment-grade credit markets to catch a cold.

• I did re-short JPMorgan this morning.

Based on reader comments below, it was not clear to some that I shorted JPMorgan Chase (JPM) this morning on the Bank of America (BAC) announcement of weakening capital-markets activity.

So I wanted to make this clear!

Note that my disclosures always reflect my current holding status. Still, not every trade is spelled out in the body of the text, as I do trade actively.

I am taking in the balance of my iShares Russell 2000 (IWM) short for a nice one-day gain.

I also took off some other index shorts across the board, lowering my net short exposure from 25% to 15%.

Staying in motion.

• Did I mention my favorite asset class are closed-end municipal bond funds?

Here is my rationale from a year ago.

Many of these names are up by more than 15% -- in fact, BlackRock Investment Quality Municipal Trust (BKN) is up 26%! I believe the group can climb another 10% in 2015.

Here's that list:

• BlackRock Municipal Target Term Trust (BTT),
• Eaton Vance Municipal Income (ETX),
• BlackRock Investment Quality Municipal Trust (BKN),
• Nuveen Select Quality Municipal (NQS),
• Nuveen Premium Income Municipal (NPM),
• Nuveen Dividend Advantage Municipal Fund (NAD),
• NuveenMunicipal Market Opportunity Fund (NMO),
• Nuveen Municipal Advantage Fund (NMA),
• Invesco Pennsylvania Value Muni (VPV),
• Invesco California Value Municipal (VCV),
• Nuveen Quality Income Municipal Fund (NQU),
• Nuveen Premium Income Municipal (NPI),
• Invesco Trust for Investment (VGM), and
• Nuveen New York AMT-Free Municipal (NRK)

• Thanks to lower capital-markets activity.

Banks are set to trade lower today on reduced capital-markets activity in the fourth quarter -- something I have warned about for several months.

I am net short the sector.

• From The Street of Dreams.

Pacific Crest is saying that (based on its consumer technology survey) weak iPad demand could cause Apple (AAPL) to miss estimates. 

IPads could be entering a period of "sustained declines."

• Not over it.

No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a cloud be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend's or of thine own were: any man's death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bells tolls; it tolls for thee.

-- John Donne

When your broker tells you the U.S. is an oasis and bastion of prosperity, and that we are insulated from the goings-on around the world -- such as the recessions in Japan, Brazil, Italy and Russia -- please consider John Donne's quote above. 

When your broker tells you to ignore global macroeconomic events, please consider the Great Decession of 2007-2009 and its causes.

When your broker tells you to rejoice at the rear-view mirror of the last quarter's "earnings" of your investments because there is more to come, please consider that this is a lagging indicator, not a leading one. Also consider that the bottom line has been importantly influenced by financial engineering, which typically has a finite life. 

When your broker tells you to exult in the heightened mergers-and-acquisition activity, please consider whether you had owned any of those companies' stocks. 

Above all, be objective and independent in your view. 

Avoid perma-anything. 

Always assess the reward-to-risk scenario, and consider your risk profile and time frames. 

Invest with your head -- not over it. 

• I'd love to hear this one from Joe and the gang.

A bullish Dr. Jeremy Siegel will shortly be appearing on CNBC's Squawk Box.

Here is a question I would love Joe and the gang to ask the Wharton Professor: 

Dr. Siegel:

It is not necessarily interest rates on U.S. Treasury bonds or build-up in excessive inventories that sowed the seeds for the last economic downturn in 2007.

It was malinvestment -- in the case of that cycle, the exporting of derivatives, those financial weapons of mass destruction, that sent the world's economies and markets into turmoil.

We have seen similar malinvestment in the last few years. We've seen it in the oil patch -- a large percentage of high-yield markets are energy credits, in commercial real estate, manifested in ridiculous cap rates. We've also seen it in the world's fixed-income markets, not only in the U.S. but, notably, in sovereign debt in peripheral European countries that yield less than our markets do. And, arguably, we are seeing excessive speculation (and malinvestment) in public and private social-media stocks (see: Uber with its $40 billion market capitalization).

Do you think this malinvestment is sowing the seeds for the next business downturn?

• It is time to be fearful when most others are greedy.

From my perch, the U.S. stock market's reward-to-risk scenario is unattractive.

Global economic growth is slowing relative to expectations: One quarter of the world is either in recession or experiencing a flat-lining of growth. Malinvestment, meanwhile, is sowing the seeds of the next business downturn as we go back into the future.

Valuations, adjusted for some mean regression in corporate margins -- which I expect -- are on the high side, based on history.  

The most abundant commodity on Wall Street is "optimism" -- and the vigorous rally from the mid-October depths has set up an extreme in bullish sentiment among investors.

Never before has growth been beholden to monetary policy. Numerous and unprecedented aggressive quantitative-easing initiatives have raised the specter of adverse consequences.

U.S. monetary policy, which has gradually lost its effectiveness, is at a pivot point: The Wall Street Journal's Jon Hilsenrath reports the Federal Reserve is in the process of shifting.

Finally, the price momentum -- to the downside in early October and recently to the upside -- are exacerbated by machines, algorithmic trading and high-frequency traders who have no knowledge or understanding of what they are buying. They just know, worshipping at the altar of price momentum, that stocks are rising.

It is time to be fearful when most others are greedy.

I have steadily raised my net short exposure to levels not seen in months.

Price is what you pay. Value is what you get.

• And no Market Setup today.

I have a hectic week of research meetings on new ideas.

There will be no Market Setup today, as I am already at a breakfast meeting.

Same applies to most of Thursday afternoon, when I have to travel to two meetings.

I will also be out all day on Friday.

I will leave others to gazing at the machines!