This is really dumb.

In the " For Traders Only" column I mistakenly said I was buying HIG JUNE $50 calls under $0.40.

I was wrong. I am buying May $50 calls under $0.40.

Sorry for the mistake!

'Til April in Paris, chestnuts in blossom
Holiday tables under the trees
April in Paris, this is a feeling
That no one can ever reprise

- April in Paris, Vernon Duke and Yip Harburg - (rare video with Ella Fitzgerald!) 

The market gapped higher and spent the day in a narrow range -- not sure what that means.

Here is an analysis from RevShark:

"...but the only thing I'm worried about is the inability of this market to generate momentum. Gap and flat action doesn't give us many opportunities, and that is of far greater concern to me than poor technical action."

- Rev Shark, Did You Sleep Through Big Market Move?

It was "Springtime in Paris" as investors saw the sunny side of the street over there and here. (Doing legends today, so here is Billie Holiday!) 

But here is "What Troubles Me and Should Trouble You." "He likes it, hey Rosie!"

I remain bearish of self-confident "talking heads" who are often wrong but never in doubt.

CAT March dealer stats. 

"Trade of the Week" - Hartford Financial Services Hartford Financial Services (HIG) .

"For Traders Only" - buying out of the money HIG calls.

 Dipped on the short side -- but in a minor way.

 At 345PM the S&P is near the top end of its daily trading range.

* The US Dollar got schmeissed after a salutary reaction to the French elections.

* The price of crude oil settled -$0.37 to $49.25.

* Gold fell by -$13. As I wrote last week, no likey.

* Ag commodities: wheat -3, corn +2.50, soybeans +8,75 and oats +2.50.

* Lumber fell by three beaners.

* Bonds declined in price and rose in yield (by 4- 4 1/2 basis points)

* The 10-year U.S. note yield is at 2.275% -- but below 2.32% it hit before trading commenced. (I thought that rollover in yields would cause stocks to take a breather from the highs -- but so far, no).

* The 2s/10s spread expanded by only one basis point to 104 bps.

* Municipals got hit but high yield was well bid on relief regarding EU economic growth.

*Blackstone / GSO Strategic Credit Fund (BGB) + a penny, I would not own here.

* Banks bolted higher as rates turned up. Seems to be exaggerated by machines, we will see throughout the week. Money centers ++. EU banks particularly strong (e.g. Deutsche Bank (DB)  -- which I would be selling).

* Insurance strong, though "Trade of the Week" (HIG) is lagging. I plan to add to very small Metlife (MET) and Lincoln National (LNC) shorts on any further gains (after covering lower).

* Brokerages had a "dead cat" bounce -- looking to short both Morgan Stanley (MS) and Goldman Sachs (GS) after covering lower.

* Auto stocks underperformed.

* Ag equipment higher despite so-so Caterpillar (CAT) retail sales for March.

* Retail was mixed with Home Depot (HD) /Lowe's (LOW) remodeling complex upside leaders. Nike (NKE) , Kohl's (KSS) and Macy's (M) disappointing -- and lower.

* Biotech stormed +2% as Celgene (CELG) led the parade. Speculative biotech was strong (ACADIA Pharmaceuticals (ACAD) etc)

* BIg pharma played catch up from recent weakness.

* Old tech stronger led by Microsoft (MSFT) Cisco (CSCO) and Intel (INTC) .

* Media was conspicuously weaker - Disney (DIS) lower in a strong tape.

* Consumer staples prospered with a lower currency -- my fave (but much hated), Campbell Soup (CPB) almost one dollar better.

* (T)FANG broadly higher. Amazon (AMZN) and Alphabet (GOOGL) continue their market leadership.

* In individual stocks DuPont (DD) and Radian Group (RDN) stood out to the upside. As did Apple (AAPL) , a small short. Everyone has forgotten about Twitter (TWTR) -- that's probably a good thing (up a nickel).

Here are some value added contributions on our site today:

1. Jim "El Capitan" Cramer on the train leaving the station.
2. RevShark (mentioned earlier) on sleeping through today's move.
3. Bobby Lang on the yield curve.
4. Alex "Phew" McMillan on regulators and technology.
5. Divine Ms M on patterns (over there).

Several months ago I established a new feature called "For Traders Only," which offers ideas for traders with aggressive, short-term time frames.

Some of our recent "For Traders Only" have been terrific -- including a 4-fold increase in a SPY put trade recently. 

This week's trading idea is to buy Hartford May $50 calls for under $0.40.

I already own a very small position, have added today (again, small) and I am bidding for more.

Remember, these are highly speculative and for traders only, so be prepared to rip up the (HIG) tickets if the market doesn't conform to expectations!

Editor's note: This post has been corrected to reflect the month the calls expire. See related post here.

"What this stuff?

Some cereal, supposed to be good for you.

Did you try it?

I'm not going to try it. You try it.

I'm not going to try it.

Let's get Mikey

He wont eat it. He hates everything.

He likes it. Hey Mikey!"

- Life Cereal commercial

I recently chronicled an email debate I had with Gluskin Sheff's David Rosenberg on the outlook for interest rates. 

Today, in response to my "What Troubles Me and What Should Trouble You,"  Rosie responded with this:

"Phenomenal piece, Dougie."

So I got that going for me, which is nice.

"The problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts."

- Bertrand Russell

As Grandma Koufax taught me, I often live in constant fear that the "Cossacks are Coming."

This is not an innate condition of fear or a permanent state of investment paralysis. Nor is it, as some have claimed, the status of a Perma Bear -- as I actually am long a number of stocks.

Rather, it is a reflection of the realities, concerns and uncertainties that investors face over the next 1-2 years.

Tomorrow's opening missive will discuss the threat of central banks' normalizing interest rates in a world heavily laden with debt.

While the Perma Bulls will call my concerns a "Wall of Worry," I believe that is far too glib and a non rigorous response to serious issues.

In the past twelve months I have consistently and continuously written that never in my investment career have their been so many market and economic outcomes -- many of which may be interpreted as market unfriendly. (This is something my pal and legendary brokerage executive and investor Ira Harris mentioned to me a few years ago).

I also wake up every morning with some nagging questions -- now totaling eight! -- "This Aint No Seder" -- which makes this market different than other markets.

Yet, many are self-confident -- and use as their baseline expectation that we will see a "hockey stick" of nominal GDP growth and U.S. corporate profit growth in the next two years coupled with some further expansion in price earnings multiples.

I am deeply skeptical of that outcome. The lack of political, geopolitical, economic and market certainty of outcome helps to explain, in part, why I have shorted my investment horizons ("Shorten Your Investment Horizons and Hang Tight") and reduced the size of my trading and investment positions. I recognize this eight year global bull market will not die easily thanks, in part to a combination of animal spirits (they call them animal spirits because animals are dumber than humans!) and central bankers (who often act like animals)!

At the same time I also recognize these pearls of wisdom from another friend, Byron Wien:

"Disasters have a way of not happening."

From my perch, the growing list of developing uncertainties is not market friendly and will weigh on valuations for, as The Oracle has taught us, the intermediate- to longer-term the market is not a voting machine but rather is a weighing machine.
I remain honest in view and uncertain and lacking of confidence of direction over the near term. At the same time I remain negative over the intermediate term -- in which downside risk is likely at least 3:1 versus upside reward.

Caterpillar (CAT) reports March 2017 retail data:
* Total machines worldwide +1% vs -1% in February of 2017
Total Machines (March 2017 vs February 2017)
· Asia Pacific+46% versus +39%
· EAME: -3% vs -3%
· Latin America: -25% vs -21%
· North America: -13% vs -10%
· World: +1% vs -1%
Total Energy & Transportation (March 2017 vs February 2017)
· Power Gen -7% vs -13%
· Industrial -6% vs -11%
· Transportation -3% vs -15%
· Oil and gas +15% vs -3%
· Total +1% vs -9%

Mid morning musings from sir Arthur Cashin:

Traders will watch to see if there is a mood adjustment when Europe closes at 11:30. A good deal of action so far is unwinding of hedge positions.

Focus will soon shift to Washington where quick fixes look unlikely and the House appears unable to act on anything.

Bond yields continue to descend from the morning gap.

The 10-year US note yield hit 2.32% (+8 basis points) in the morning's early hours but is now under 2.27% (now only +3 basis points).

This is my most important negative "tell" for the short-term market direction. The fixed income market guides me in equity exposure. It is not failure proof, however, as there is no indicator that provides me with the confidence of traversing a market dominated by quant strategies that are solely committed towards price trending and are agnostic to balance sheets and income statements.

It is now telling me to be more cautious.

So, stay tuned to how the day develops.

And, stay tuned for an updated summary of my short and intermediate term market expectations!

Zero Hedge addresses the rollover in yields I mentioned (in an explanation of why I moved back small short)  -- and the possible inconsistency of the large gap up in financials.

I reestablished small trading rentals in ProShares UltraShort S&P500 (ETF)   (SDS) (at $14.30) and ProShares Trust UltraPro Short QQQ ETF (SQQQ) (at $35.67).

I added to Hartford Financial Services (HIG)  -- now up by only +$0.26 to $47.53. I will make HIG (long my "Trade of the Week")

And I sold some more DuPont  (DD) on strength (at $79.48).

With the S&P 500 up by nearly 30 handles, I have re-established some very small (emphasis: very small) trading rental shorts on the indices to move to slightly net short on the upside gap.

My cues and catalysts are several fold. First is the move of the  10-year U.S. note yield back to under 2.39%. Second is the Pavlovian and large upside move in the financials that seems a bit emotional and could be derailed. And finally it is the scrambling to cover and the likely "quality" of the buying (see below). 

Remember, stocks are making this conspicuous move after some technical damage over the last few weeks, and even though the indices were not oversold yet.

And, as mentioned in my opening missive below, many were "off sides" into yesterday's election.

I am skeptical of a huge gap created in a low-volume "off time" for the markets. With shorts and under-invested investors/traders  scrambling this morning and with perhaps others (read: establishment/central bankers) wanting the markets to look like everything is fine for now in France and that Europe is saved,  it seems to this observer that a low-volume market is being overcome by the "buy higher" players who are making overly aggressive bids for the markets' liquidity position.

This sort of "lack of quality" market strength usually doesn't last very long.

But my respect for the markets' momentum and the  dominance of price momentum strategies makes me give the market more of a berth than typical. 

I have moved from slightly net long back to market neutral this morning.

How do I plan to react to the upside gap this morning?

I will do nothing, nothing at all -- as, for now as it relates to the near-term market performance, I know nothing, nothing at all!

In light of my interest rate view (higher), I planned to make Hartford Financial Services Group (HIG)  my Trade of the Week as a long.

But, the stock likely will gap higher, so it's back to the drawing board!

My pal Peter Boockvar, chief market analyst with The Lindsey Group, writes about Making France Great Again:

While I don't believe the US stock market was worried whatsoever about the French election in terms of its pricing and recent action and the French CAC as of Friday was only about 2% from a multi year high, it's clear that we dodged a bullet with the high likelihood of a Macron Presidency. It will be interesting to see how he squares his prior assistance to the Socialist party with his appreciation of business and the desire for lower tax rates. I'm hopeful on the latter but we after all are still talking about France, the bastion of the European social welfare state. MFGA, Make France Great Again!

For US stocks and what matters most, it will still be all about when and what tax reform looks like and the tightening headwinds this year that will be monetary policy. I'm sorry people but I'm going to keep hammering home my belief that central banks are the biggest risk to markets this year as the monetary punch bowl is slowing being taken away. With a Macron victory, I look forward to hearing from Mario Draghi on Thursday on when the next taper is. He may or may not give any indication but if he was worried about European politics before the weekend, there goes that and he now has a green light to taper again. German bonds in particular are taking it on the chin and it's not just their long end. The German 2 yr yield is higher by 9.5 bps to -.70%, matching the highest since late January. The German/French 10 yr yield spread is also back to the late January levels with its sharp narrowing today. Peripheral European bonds are rallying with French oats. I continue to like the euro and can't stand European sovereigns which are again a huge short after this recent French fear rally.

I think the US stock market has been completely desensitized to the possibility of a government shutdown as we've been down this road before and we all know that if the government closes, it will soon reopen. Therefore, move on.

US Treasury yields will continue in the tug of war between soft US data, hopes for tax reform, pretty good overseas data, lower political worries in Europe, now likely higher European yields and less central bank largesse. I'll stick to my belief that the post Brexit vote lows in yields will never be seen in our lifetimes and that the 2.30-2.60% range in the 10 yr will reestablish itself after the events of yesterday.

While I understand the knee jerk reaction in gold to sell off today, I hope at some point people finally realize that it's never been a safe haven trade. It's just a currency that happens to be yellow, weighs more than a piece of paper and happens to be really difficult to get out of the ground. What is more clear is the troubled state of most fiat currencies and the attractiveness of gold against them. I mean even the US dollar index level is no different than where it was two years ago.

Chinese stocks continue to trade like crap. The Shanghai comp closed down by 2.4% to the lowest level since Trump's inauguration. It's now barely up on the year. The recent action is mostly in response to the Chinese government's attempt to start reigning in leverage and market related shenanigans (what they call risk prevention). Financial News which is a news periodical from the PBOC said they will be introducing more directives to lower leverage levels in the financial system and part of that will be to tame money supply growth. The first line of the story said "The pace of financial deleveraging is steadily advancing." Well maybe we can now add the PBOC to the list of central banks this year that will be taking away monetary liquidity. The Chinese 10 yr bond yield is also rose to the highest level since August 2015.

Data wise, we saw the important German IFO business confidence index for April and it rose .6 pts m/o/m to 112.9 and that was .5 pt above the estimate. A rise in the Current Assessment more than offset a drop in Expectations. The headline figure is now at the best level since July 2011. IFO said succinctly, "The German economy is growing strongly." German business was not too worried about French politics, either.

Last week we saw soft consumer spending data out of the UK and today we saw weaker industrial business news. The CBI industrial confidence figure fell to 1 from 15. The estimate was for a drop of just 3 pts. Total orders got cut in half and selling prices remained just off the highest level in 6 years. Smacks of stagflation. Exports fell 7 pts but optimism for them improved on the weak pound. CBI said "Manufacturers' anticipate that new orders will grow more moderately over the near-term, largely owing to a predicted slowdown in domestic demand outweighing export orders growth - expectations for the latter are at their strongest in over two decades." They also said "There was a softening in investment plans across the board, particularly those for buildings and plant & machinery, with the latter at its most negative for nearly six years. When queried about potential limits on capital spending over the next year, the proportion of firms citing inadequate net returns climbed to the highest in a decade. Headcount saw decent growth, but hiring intentions for the next three months are muted." The BoE has themselves in quite a pickle.

"At last the country is going to war...

They think we are going to war.

Oh, Heidi Heidi Heidi Ho..."

 - Marx Brothers, Duck Soup (All Hail Fredonia! ) 

All hail, Fredonia!

But, Fredonia is not going to war!

A favorable Sunday French election, coupled with a now likely follow-up election with a Macron win over Le Pen, has led to dramatic results across numerous asset classes -- in currencies (euro is up), commodities, bonds (lower) and equities (much higher).

Stated simply, the magnitude of the responses in the capital markets seems to indicate that many market participants are "off sides." 

Though S&P futures are up by over 28 handles, to me the easiest trade (adjusted for risks) is to be short bonds, rather than long stocks -- though I have been playing this market, against custom, from the long side over the last week.

The 10-year U.S. note yield is 7 basis points higher this morning to 2.30%; as I expected in my recent columns, it is now back in the 2.30% to 2.65% trading range. 

Prepare for most talking heads to say "I told you so," that they got the market totally right this morning. If so, they will have forgotten their previous bearishness or uncertainty and some will even forget what they said last week!    

From my perch as to where we might go from now -- to be honest, "I don't know" in the market without memory from day to day.

With equity futures up dramatically, it sure feels like a short squeeze and/or a scramble to get reinvested.

I Plan To Be Reactive, Not Anticipatory, in the Market Without Memory From Day to Day

But I will let the market tell me what to do, rather telling "it" what to do.

I believe we can argue either exhaustion gap or a continuation move.

Gun to my head? I would favor an exhaustion gap over a continuation move -- but my conviction level for the near term is low. Given excessive valuations levels, a likely disappointment in hard economic data and expanding political risks, I remain bearish over the intermediate term (as you all know!).

One thing for sure, I will give the market a wide berth, both on the long and short side, in a market dominated by price-trending strategies and ETFs that seem, by definition, to "buy higher and sell lower."

I start the day very slightly net long and substantially short bonds.