As of 3:49 p.m. ET there is $150 million to sell market on close.

• There is a great deal of uncertainty and indecision in both the bond and stock markets these days.
• Large daily swings will likely become the norm.
• The aforementioned factors argue in favor of lower portfolio value at risk by reducing position size.

Now back modestly net short as I scaled into more SPY shorts (cost basis $210.47).

While not defined as an absolute rip, we can consider it a rip from the morning's lows when S&P futures were about -15.

In "The New Oil Order: A Self-Defeating Rally," Goldman Sachs argues that the price of oil will resume its downtrend this year, citing three reasons why the rally is inconsistent with existing and projected fundamentals:

1. Current and forward crude and product balances remain weak
2. Current prices over time lead to higher U.S. activity
3. The capital imbalance remains intact

It has been a remarkable comeback for the bond market today. After a nine-basis-point rise in yield to 2.35% in premarket, the 10-year U.S. note yields 2.23% now (at the day's lows). Closed-end municipal bond funds are generally reversing the weakness in the early going this morning.

As I opined in Columnist Conversations, the continued intraday yield descent has buoyed stocks, and the S&P 500 and Nasdaq futures have both turned positive on the day.

The Lindsey Groups' Peter Boockvar graded the three-year auction:

Near the highest yield in two months, the 3 yr note auction was above average. The yield at 1% was below the when issued of 1.005/1.01 while the bid to cover of 3.34 was about in line with the previous 12 month average of 3.30. Direct and indirect bidders were aggressive, taking the most amount of the auction since May '10 leaving dealers the least amount since then.

Bottom line, at least on the short end which is well anchored by the Fed which we know will be glacial in raising rates whenever the time comes, the current yield saw pretty good demand. Of course though the real action has been on the longer end of the curve and the steepening that we've seen. Fortunately, we see the 10 yr note auction tomorrow and the 30 yr on Thursday which will be a great gauge of sentiment on whether current yields are attractive enough. Inflation expectations will be an important influence on these longer end auctions and in this context the CRB index is trading today at the highest level since December 30 on a closing basis. I reiterate my bullishness on them. Labor of course though is the bulk of company expenses and today's March JOLTS number showed the 2nd highest level of openings since 2001 and a quit rate that matches the highest in this cycle.

I have been successfully navigating the volatility and responded to market action in a non-dogmatic fashion (for a change!).

But it is chaotic and certainly not for everyone.

Most should be reducing the "Value at Risk," as heightened volatility is resulting in large P&L swings, relative to history, in a same-sized portfolio. That said, I remain cautious and a (short) seller on strength.

I remain slightly net long but with a finger on the trigger.

It is important to note that the volume on the downside (today) continues to outpace the volume on the upside (of late).

Never a healthy sign.

• Midday musings from Sir Arthur Cashin:

Yield on ten year now down on the day, hinting the multi-day brushfire in sovereign bonds may have run its course. Bruised traders fear it's too early to tell so hesitate to celebrate. Other asset to the bulls is that while the two day selloff erased the "payrolls rally", equities did not continue significantly lower thus creating the impression of testing a key "support".

The JOLTS job openings report for March is a bit dated, but it showed a below-consensus print.

At 4994, it compared to estimates of 5108. That's still a relatively strong jobs market.

The quit rate climbed to 2% as the number of unemployed job seekers dropped to 1.7. By comparison, the number was at 1.7 at its 2007 low -- this means that this measure indicates a tighter labor market that has begun to show up in wage inflation.

The implication is that the slack in the jobs market is not coming from the unemployed but from the underemployed.

Thus, the JOLTS numbers seem to point to solid labor market conditions despite the slowdown in labor market momentum.

• More housekeeping items.

I have covered the balance of my small SPY and QQQ shorts this morning.

• Mid-morning musings from Sir Arthur Cashin:

Traders seem to have a mental line in the sand ¿ the 2.3% level in the U.S. ten year. Above that level = pressure on stocks; below = less or no pressure. Thus the rebound.

The yield on the 10-year U.S. note is now down on the day (by two basis points to 2.258%), after being more than nine basis points higher on the day in premarket trading.

I have eliminated the balance of my Apple (AAPL) short (for a nice gain) and plan to re-short if the shares move back toward $130 per share. I have also taken the balance of my XHB short (Trade of the Week) at $35.02.

Good trade.

I have taken in another fourth of my Trade of the Week (short XHB) at $35.06 and covered some Apple (AAPL) at about $125 (now down to "tag ends").

As a result of today's trades, I am back to market neutral.

Short XHB (small), AAPL (small)

I have just added to the following bank longs: BAC, JPM, C, MBFI, EFSC, STL, MSL, SONA, FITB, FMER, RF, WFC and BBT.

Many preconceived consensus ideas/expectations have been proven incorrect this year.

This week, so far, the notion that the return of corporate buybacks would lead to a resumption of the bull market is another that has failed to materialize.

I am taking in a fourth of my SPDR S&P Homebuilders ETF (XHB) short for a $0.75 gain now.

I am bidding across the board for banks. Maverick's re-engaging.

In the incredibly volatile bond world, the yield on the 10-year U.S. note was up 9 basis points (to 2.36%) an hour ago and is now flat (from yesterday's close).

The NFIB small business optimism index rose to 96.9 from 95.2 last month, reversing some of the decline seen from the start of the year, but still well below the December high.

The plans to hire index ticked up to 11% from 10%, but it is still slightly below the six-month average of 12%. Capital spending expectations rose a bit and is now in line with the six-month average. Compensation plans have been pretty much flat for the last six months after the rise seen in last year's second half, while those expecting higher sales fell to its lowest level since October, 2014.

In summary, the report was better on balance, showing the small business sector is recovering, albeit slowly from the 1Q weather-induced weakness. The internals of the report were somewhat mixed, though, as the 2Q bounce back is still weaker than consensus expected.

Sanford Bernstein's focusing on margin declines in IBM's (IBM) services biz (represents greater than 50% of IBM revenues) this morning.

Operating margins in services division used to go up 115 bp a year and drove EPS upside. Restructuring charges are now higher than they historically were, so savings should be getting bigger. But instead, margins were down over past four quarters. 

In first quarter 2015, margins should have been up 200 bps, but instead came down 300 bps. This suggests major headwinds, partially a function of a maturing industry, but more so IBM's overexposure to packaged applications (ERP) plus outsourcing, both of which are experiencing pricing pressure.

In order to meet 2015 consensus expectations, IBM needs to take margins up 300 bps. That would be one of highest improvements over the past 18 years, so not a slam dunk.

Bottom line, SC Bernstein's analyst sees continued concerns over anemic sales and cash-flow growth.

Sacconaghi has a price target of $150 a share. 

I am small short, Buffett is large long.

In a recent post, "Serving a Healthy Banking Cocktail," I have outlined a forward-looking case for owning an outsized position in banking stocks.

Despite the improved relative-sector performance and my cautious market view, I plan to be adding to my long banking exposure -- across the board -- in today's weakness.

On the dark side, the quantum rise in global bond yields should weigh on my Trade of the Week (shorting housing via SPDR S&P Homebuilders (XHB)).

Peter Boockvar talks the sel off in bonds in his morning commentary. 

It's another messy day in global fixed income. This time it started in Japan after the auction of 10 yr JGB's saw the lowest bid to cover ratio since February 2009 by a decent margin. It was 2.24 vs the previous multi year low of 2.37. The 10 yr JGB yield closed up 5 bps to .45%, a 2 month high. The weakness in Asia was also broad based with yields in Hong Kong, South Korea, Thailand, Australia, New Zealand and Indonesia all jumping double digits. European sovereign bonds followed much lower with yields spiking another 9-10 bps across the board. The ECB is now getting a taste of what the Fed experienced after its QE programs in that yields eventually went up on confidence that the reflation attempts would work. The US 10 yr note yield at 2.33% was last seen in November on a closing basis. I'm going to list again my 10 reasons for what may be occurring in fixed income, at least for US Treasuries, as the global bond bubble continues to shows its initial signs of popping:

1)The ECB gets some of what it wants and that's higher inflation expectations (the 5yr5yr euro swap that Draghi likes) but at the cost of losing some control of European bond markets, 2)foreigners have been net sellers of US notes and bonds for 4 straight months thru February totaling $82b, 3)the Fed of course is no longer a net buyer, 3)commodity prices have stopped going down with the CRB index just off a two month high, 4)implied inflation expectations in TIPS have jumped off their lows with the 2 yr breakeven in particular near the highest level since last summer, 5)the US March core CPI printed 1.8% y/o/y, matching the highest since July '14 as services inflation, led by rents, continue higher by 2.4-2.5% y/o/y every month and EU CPI has stopped printing negative, 6)petro dollars don't flow like they used to and that means less money getting recycled into US Treasuries, 7)China's FX reserves are at the lowest level since September '13 which also means less bond buying, 8)the big US dollar rally over the past 6 months has skewed higher the value of US dollar reserve holdings and maybe central banks and others are rebalancing to shrink those holdings, 9)US banks, a big buyer of US Treasuries for regulatory capital ratio reasons, may have reached their limits and 10)the belief that just maybe the Fed will actually raise interest rates this year or maybe the reverse that they won't, dollar stops rallying (which has certainly occurred) and inflation stats continue higher that the Fed doesn't offset with a hike.

Some are taking comfort that stocks can withstand this because maybe they aren't as fully priced as fixed income but we can't forget what helped get us to all time record highs, that being excessive valuations substantiated by extremely low rates, lowered interest expense that provided a huge bulk of profits over the past 6 years, and of course massive stock buybacks partially financed by a record issuance of corporate debt. If stock buybacks and dividends were financed by internally generated cash flows that is one thing but taking on record amounts of debt to do so is another. Even Apple, the amazing company that it is with huge cash flows, massive cash parked overseas and a AA+ credit rating, has managed to take on almost $44B of debt to buyback stock.

"I love the smell of napalm in the morning."

-- Apocalypse Now

A sage observer once remarked: "Speculation is going on when someone else is making money and you and I aren't."

Speculation ("mothered" by Fed policy) has been ripe, as hot money has raised the price of financial assets even in the face of disappointing progress in the real economy, rising geopolitical risks, numerous negative macroeconomic events (particularly of a EU kind), multiple signposts of malinvestment and to a host of other factors that, in the past, have adversely impacted financial asset prices.

Valuations, particularly as expressed by CAPE or market capitalizations relative to GDP, have moved towards lofty levels. 

Indeed, some have openly criticized those that were concerned as Cassandras and worrywarts -- preferring, instead, to take the position that "the data doesn't matter" (as both good and bad news were seen as good news) and to respond to positive market price behavior.

That approach has paid off handsomely as this has been the correct strategy, with averages tripling since the Generational Low.

The crowds of bulls have outsmarted the bearish remnants, as dips have been bought and even corporations have joined the celebration with a record level of share buybacks. Despite clear corporate history of buying high and selling low, financial engineering has been celebrated and has been a mainstay of the Bull Market over the last three years.

However, at some point -- and we are likely close -- market participants will confront, and retaliate against, the artificiality of stock and bond prices.

While no one knows (with certainty) where Mr. Market or the global economy is headed, I remain convinced that the following additional 12 key "big picture" factors could weigh on markets and on the real economy over the balance of the year and into 2016:

1. Multiple and unpredictable outcomes: There have likely never been in history more numerous market and economic outcomes some of which are adverse and most of which are being ignored by market participants.
2. Stuff happens: Black Swans appear to be happening with greater regularity.
3. Weak growth ahead: Central bankers' aggressive monetary antics have only produced subpar global economic growth.
4. Borrowing from the future: Zero interest rate policy (ZIRP) has borrowed past and present sales from the future, underscoring the challenge of future economic growth.
5. Unknown consequences of policy: No one knows the consequences of an extended period of ZIRP "punch bowls," often resulting in aberrant behavior and hangovers.
6. Making no sense: Indeed, if there were no consequences to zero interest rate policy, interest rates could have been held at zero forever -- in the past, as well as in the future.
7. Stop looking up, start looking down: Monetary overkill (in duration and in the level of interest rates) may produce the adverse consequences of malinvestment. It has resulted in the hoarding of cash and reduction in spending by the disadvantaged savings class.
8. Uneven and less dependable growth: The "exclusive prosperity" of the haves (vs. the have-nots) is politically unstable, leads to more uncertainty (and unexpected outcomes) and will likely have a negative and more volatile impact on our social system, on the global economy and on our markets.
9. Tom Friedman has the ticket: Our world has never been more flat, more networked and more interconnected. As such, the notion of an "oasis of prosperity" is not likely rooted in fact.
10. Trouble ahead, trouble behind: Terrorism and religious radicalism (political and economic) will be more of a threat in the future than in the past.
11. Treacherous technology: In a paperless (and "cloudy") world, investors and citizens are not likely as safe as the markets assume.
12. Lack of coordination: Geopolitical coordination is at an all-time low and isolationism seems likely to be a mainstay in the time ahead.

No one knows for sure what factors will impact our markets. But one thing is for sure: when it occurs, a near peak in complacency will be the overriding condition and the absence of fear and doubt will be the overriding emotion.

Historically, these have been fresh conditions that have contributed to the emergence of "contagion" (in which a decline in one asset class impacts another asset class). We will likely soon recognize how shallow and illiquid our markets have become as a direct result of policymakers and in the absence of skepticism.

Safe Havens Become Unsafe

The return of price discovery may have already started in the world's fixed income markets (as the bond vigilantes have come out of hibernation ¿ taking the 10-year US note yield about 22 basis points higher in the last two trading days) and it is difficult to envision global equity markets unscathed.

When safe havens become unsafe (and volatile), most investors should be buckled down now in the current period of uncertainty...and complacency.

With heightened uncertainty and rising volatility, the most reasonable strategy is to reduce your portfolio's "Value at Risk".

With market volatility heightened, I am calling an audible.

In pre-market trading I have covered a portion of my SPDR S&P 500 ETF (SPY) short at $208.88, in order to take down the size of my SPY short from medium-sized to small-sized.

I am now only slightly net short.

Though I am sticking with a small SPY short, this move is a bit contrary to my "shorting the rip and staying short" notion -- but I have decided to stay more flexible  of view.

Staying in motion, locomotion -- and trading opportunistically.