For now the market is on autopilot higher, with machines and algos at traffic control.

Causality has lost its influence.

Case in point -- agricultural commodities continue lower while fertilizer stocks continue higher.

An enigma, wrapped in a riddle!

I am leaving at the close to watch the movie, "Stronger," with my family at the close. 

Thanks for reading my Diary, enjoy the evening and pray for those lost.

Adding to October PowerShares QQQ Trust, Series 1 ETF (QQQ) $145.50 puts at $1.68.

Value over growth today.

And S's over N's today.

With Nordstrom, Inc (JWN) shares now down by 7%  I would think there could be some pressure on management to status the "going private" transaction (see this New York Post column).

If my hunch is correct -- that while any retail LBO is tough in this climate (but progress is being made) -- I wouldn't be surprised if the company statuses the deal this week.

I have put on a trading layer on top of my investment position this morning.

Market Musings from Sir Arthur Cashin:

Market not shrugging off Las Vegas tragedy but appears to have calculated it as a single Lone Wolf event with little to no ideology. Therefore repeat or follow-up highly unlikely.

Stocks seem to benefit from new money for a new month.

Watch WTI - if it breaks below $50, could impact market moves.

Today's awful event took me back to what happened to Nanette and myself at the Ft. Lauderdale Airport in January, 2017. 

Regular readers of my diary know I sometimes post things that replicate the theme of the "Tell Me Something I Don't Know" segment on MSNBC's "Hardball With Chris Matthews."

So... "Tell me something I don't know, Dougie."

OK, here it goes:

S&P futures volume is under 400k contracts today.

That is a very low level of activity.

In other words, S&P futures are +9 handles on extremely low volume.

As most are aware, I am strongly convicted in the view that directional call and put buying -- as a steady diet -- is not a recipe to profits.

But, on occasion, there is a role in this sort of speculation for those with high risk profiles and appetites.

Here is my rationale for purchasing the PowerShares QQQ Trust, Series 1 ETF (QQQ) October $145.50 puts:

* As expressed earlier, we seem to be in a buying panic -- what I view as a non sustainable move.

* Momentum (RSIs) and sentiment (CNN Fear & Greed) indicators support the view of an extremely overbought market and Nasdaq.

* As noted , (T)FAANG is uncharacteristically lower in a rising market. I recently wrote an extensive three part series why I expect this to continue.

All (T)FAANG components -- Tesla (TSLA) , Facebook FB , Amazon (AMZN) , Apple (AAPL) , Netflix, (NFLX) , Alphabet (Google) (GOOGL) -- are down on the day.

I don't recall the last time this happened.

I was stopped out on Ford  (F) and took a quick trading profit in  GM (GM) .

I am more than doubling the size of my ProShares UltraPro Short QQQ (QQQ) short (at $145.91) -- moved to large-sized.

From The Lindsey Group's Peter Boockvar on the latest economic data:

The September ISM manufacturing index rose 2 points to 60.8, above the estimate of 58.1 and the best level since May, 2004. New orders rose by 4.3 points to 64.6, the highest level since February. Backlogs grew by 0.5% to 58. Inventories at the manufacturer level though fell by 2.5 points to 52.5 but only after rising by 5 points in August. Customer inventories remain well below 50 at 42. Export orders were up 1.5 points to 57 after dropping by 2 points in August. Employment was higher by 0.4 points to 60.3, the best since June '11. Prices paid jumped by almost 10 ptoints to 71.5, the highest in 6 ½ years.

Of the 18 industries surveyed, 17 saw growth vs 14 in August. The only sector to report a contraction was furniture and related products.

Some industries certainly did cite the hurricanes as impacting their businesses but mostly in terms of higher costs, hence the spike in 'prices paid.'

Bottom line, each of the regional manufacturing survey's were very good so I wasn't exactly sure why the ISM estimate was for a modest decrease. Good growth overseas, along with a weaker dollar and hopes for regulatory and tax reform likely all contributed to the manufacturing strength in September. Again though, this is measuring the direction of change, not the degree. Notwithstanding the upside surprise and 13 yr high in this index, US Treasury yields actually moved DOWN. Maybe because of what Markit said.

The Markit index of US manufacturing for September was basically unchanged m/o/m at 53.1 vs 52.8 in August and 53.3 in July. It got as high as 55 back in January. And this wording from Markit is in stark contrast to the ISM data, "While the headline PMI remained resiliently elevated in September, despite disruption from hurricanes Harvey and Irma, the details of the survey are more worrying. Output growth was unchanged on August's 14 month low, and translates into stagnation at best in terms of the official manufacturing output data. Firms' expectations of future output growth also slipped to a 4 month low." Employment did rise to a 9 month low but as its rising faster than output, that leads to a decline in productivity. Backlogs were little changed m/o/m and new orders fell for the 2nd straight month. Exports "rose marginally." Input prices jumped at the fastest pace in almost 5 yrs.

Bottom line, it's quite the difference in reading these 2 press releases from ISM and Markit. The only thing that seemed similar in the 2 was the commentary on price pressures.

FANG, the object of my disaffection late last week in a three-part series, continues to lag the rising market.

Allergan (AGN) is about $5 higher on strength in Teva Pharmaceutical  (TEVA) .

This is about the price at which I reduced late last week to bring the position from large to medium in size.

* CNN Fear & Greed Index is at 89. 

* The seven-day Russell 2000 RSI is up to 95.

Neither can move above 100!

I have sell stops in my Ford (F) and  General Motors (GM) trading long rentals at $11.95 and $41.75, respectively.

No one expected the "going private" transaction by Nordstrom (JWN) to be easy in light of the headwinds in the retail industry.

I don't want to be too harsh, but my experience with the media is that the New York Post is not likely a "go to" source for mergers and acquisitions.

That paper's report that sources say the negotiations are "faltering" may have less substance than the market apparently believes today.

So, I am using the weakness to add JWN at $44 and Dillard's (DDS) at $53.30.

I purchased small trading long rentals in Ford (F) and General Motors (GM) on the opening with tight stops.

Purely technical.

There is an ongoing debate whether the equity markets have discounted the path to tax reform.

I have argued that the markets do anticipate tax cuts (maybe not tax reform), as evidenced by extended valuation metrics that in many cases exceed the 95% decile.

My view remains, as Peter Boockvar gave voice to this morning (see below), that investors and traders are drugged up on the tax reform euphoria.

What amazes me is how asymmetrical many view the markets.

When the Fed was easing, weak data didn't matter because of the "don't fight the Fed" mantra.

When the Fed is no longer your amigo and is tightening, it doesn't seem to matter because "the economy is doing better."

I continue to subscribe to the notion that quantitative tightening will be a major headwind after quantitative easing served as a major tailwind.

From Stephen Burns:

My pal Peter Boockvar, chief market analyst with The Lindsey Group, addresses the commencement of quantitative easing (QT) and other subjects in his commentary this morning:

QT is about to begin. That sucking sound of liquidity leaving the US financial system will be faint in Q4 with only $30b being removed but beginning today until year end 2018, it will total $450b and that is just to start. If continued it will then total $600b in 2019 and so on. Let's assume the ECB begins their tapering in January of another 20b euros to 40b euros per month. And then let's assume it drops off 10b euros per quarter and then ends by December 2018. From the current pace of 60b euros of monthly buying, that would equate to total ECB purchases of 300b euros (about $350b) in 2018 down from a 720b euro ($850b) run rate. At the current run rate of about 60T yen per year of buying ($550b), the BoJ will continue to dominate but because of FX, not all QE is fungible.

As a reminder, QE2 totaled $600b and from around the time Bernanke hinted at it in Jackson Hole in August 2010 to when it was done on June 30th 2011, the S&P 500 rallied about 22%. I'd say it's widely obvious that the behavior of monetary policy also helped to kill volatility over the past 5 years and ahead of the sucking sound mentioned above it just so happens that the net speculative short position in the VIX futures made another record high for the week ended Tuesday. Interesting times.

NET SPEC SHORT POSITION IN VIX FUTURES

What's also so interesting about markets is the 10 yr US yield. About a month after the US election it touched 2.60% and in March it got up to 2.63% of course on hopes for Trumponomics. Here we are now though with tax reform finally moving soon to a piece of legislation hopefully and the 10 yr yield sits at 2.34%. Either the 10 yr note is a big short here or there is a different message from the bond market as participants try toreconcile the tightening of monetary policy (a curve flattener) with the likelihood of lower taxes and the obvious economic implications (a curve steepener).

We saw some mixed data out of China over the weekend and depending on whether one is a large company SOE vs a small or medium sized private one, different feelings were expressed. The state sector weighted September manufacturing PMI rose .7 pts to 52.4, the best since April 2012 (and not coincidentally comes right before the Party Congress in a few weeks) and the services index rose 2 pts to 55.4, the highest since May 2014. On the flip side, the Caixin manufacturing index of smaller, mostly private companies fell to 51 from 51.6. The estimate was 51.5. That is a 3 month low. Production, new orders (3 month low), exports (barely above 50), backlogs (5 month low) and employment all fell. Also, "inflationary pressures picked up, with average input costs and output prices both rising sharply."

The policy response to the discrepancy was reflected in the PBOC's reserve requirement cut of 50 bps where only banks that meet specific criteria for lending to small companies and those involved in agriculture will qualify. This policy change however does not take place until 2018. I heard chatter about this on Friday so the news over the weekend was not a complete surprise and the new initiative is really intended for small private businesses that would be borrowing less than $1mm.The Shanghai comp closed up .3% as did the H share index. The Hang Seng was up by .5%.

Japan's Q3 Tankan manufacturing index improved to 22 from 17 and that was 4 pts better than expected and is at a 10 yr high. The breadth of industries seeing growth was widespread. The services index however was little changed from Q2. For small businesses, both manufacturing and services rose q/o/q and was above the estimates. With respect to capital spending plans, they moderated a touch to 7.7% growth from 8% and was slightly below the forecast of 8.3%. The price components, both input and output, rose q/o/q but the outlook was mixed. A main problem for Japanese industry are now labor shortages where those complaining of them rose to the highest level since 1992. In response, the 10 yr JGB yield was up less than 1 bp while the 40 yr was higher by 1.5 bps and is back to near the highest since February 2016. The yen was lower while the Nikkei rose .2%.

Looking at manufacturing PMI indices for September throughout saw m/o/m gains in South Korea, Japan, Vietnam, Thailand and the Philippines and declines in Malaysia, Indonesia and Taiwan.

The final manufacturing PMI in Europe was revised down a hair to 58.1 from 58.2 but that still finishes the month at a multi year high. Even Greece saw its best growth since June 2008. Also of note, "Surging order book growth has encouraged manufacturers to take on extra staff at a rate never previously seen in the 20 yr history of the PMI survey...Optimism about the outlook has also improved, highlighting the increasingly positive mood among euro area producers. The stronger euro has so far barely dented export growth and domestic demand conditions were generally seen to have improved." With respect to inflation, input costs rose to a 5 month high while selling prices "rose for the 12th month running and also at the fastest pace since April." As this figure was just a revision, there is no market response and instead the region is focused on the Catalonia vote. In response to that the Spanish 10 yr yield is higher by 8 bps to 1.69%, a 2 ½ month high, the euro is weaker and the Spanish IBEX index is lower by 1.3%. Italian and Portuguese bonds are getting dragged down too but German and French yields are little changed.

The UK manufacturing PMI for September fell to 55.9 from 56.7 and was just below the estimate of 56.2. New orders fell slightly as did employment but exports were strong. With inflation, "input costs and output charges both rose at faster rates in September" due to rising commodity prices, the exchange rate and supply chain constraints." Expect the BoE to raising rates one month from now.

Lastly, the unemployment rate in the euro region in August held at 9.1%. While the estimate was for it to fall to 9% it is still at the lowest level since early 2009. It peaked at 12.1% in February '13 after bottoming at 7.3% in November '07. We hear from the ECB in 3 ½ weeks.

Morgan Stanley downgrades Union Pacific (UNP) and CSX (CSX) based on weaker-than-expected auto and coal deliveries and lower pricing realizations.

A Sunday column in the New York Post suggests that the Nordstrom (JWN) "going private" transaction is not going smoothly. 

I don't know if the newspaper column is accurate. but I am working on it. I suspect there might be an update from the company this morning.

The shares are indicated down by about $2 in premarket trading.

A weekend ends in tragedy in Las Vegas in what is described as the largest mass shooting in U.S. history.