Here it is:

I purchased a starting position in SPDR S&P 500 ETF Trust DEC (SPY) $255 puts at about $5.10.

These puts have a delta of 0.54.

I plan to make this a sizable position.

I know by the Comments Section that there has been alot of bottom fishing in Teva (TEVA) .

I had done a few hours of research on the company over the last months and passed on the name.

I would continue to avoid the shares based, in part, on the following:

* Consensus estimates (which were close to $4.00/share) are still too high.  The new CEO is likely to reset earning expectations towards the $2.50/share level reflecting continued generic competition and the impact on pricing and profitability.

* Teva's equity cap is only $16 billion, but its enterprise value is almost $52 billion. The company's debt load is large ($36 billion) and interest (on that debt) relative to EBITDA is stretched. 

* Though price to sales and price to book value seem attractive -- it could be a value trap given the fundamental uncertainties and the financial risks associated with the above.

I will expand on my analysis later in the week.

I initiated a small starter position in the October PowerShares QQQ Trust  (QQQ) $146 puts just now -- on the strength/rebound of the Nasdaq from the day's lows.

Less capital employed, more leverage.

Some things that surprise me today:

* Equities have no down ticks, again. This, to me, the unrelenting advance is consistent with a machine-driven stock market.
* Despite the much better than expected ISM print, the bond market is flat.

* The strength in consumer packaged goods in the face of a top line miss at PepsiCo. (PEP)

* Tesla (TSLA) , always.

* Fear & Greed hits 90 -- I suppose its going to 110! While we know sentiment is a poor trading tool, I am surprised that there is little/no discussion of any risks in the business media and elsewhere.

* The President seems to suggest that the Puerto Rican debt will go to zero in value. No one is mentioning that it is not his decision.

* Nasdaq, looking like it might roll over, picks up a huge bid out of nowhere.

* Did I mention the market's continued rise?

I have moved from large to medium sized in my Radian (RDN) long and I have taken my consumer packaged goods shorts down from medium sized to small sized.

These moves in no way change my view on these equities all of which remain on my Best Ideas List - rather it is a discipline employed within the confines of my risk management.

I have placed most of the money I raised today into 1-year U.S. notes with a yield of 1.32%.

Reflecting my confusion (and lack of understanding) with regard to the markets I am lowering my gross exposure by moving two favored longs (Allergan (AGN) and Twitter (TWTR) ) and four shorts (Apple AAPL,Facebook FB, Disney DIS and Starbucks SBUX) from medium-sized to small-sized.

Again, this doesn't relate to the appeal of these longs or shorts, but rather to the aforementioned confusion and my desire to shrink exposures (long and short) in accordance with my risk control principles.

All these stocks, save Facebook, remain on my Best Ideas List.

This morning I sold my ProShares UltraShort QQQ (QID) long and reduced my ProShares UltraShort S&P500 (SDS) exposure from large to medium sized, while adding to my October $145.50 PowerShares QQQ Trust (QQQ) puts.

The Lindsey Group's Peter Boockvar parses two surveys:

The ISM September services index jumped to 59.8 from 55.3 and that was well above the estimate of little change at 55.5. It's also the best read since August 2005. New orders rose 6 pts to 63, just off the best level since the election that was seen in April. Backlogs were up by 2.5 pts to 56, a 4 month high. Employment was higher by .6 pts to 56.8, a 4 month high too. Export orders (only a few service companies report them) rose by 1 pt. The improvement in these internals did come with more price pressures as prices paid spiked by 8.4 pts to 66.3, the highest since February 2012. I'm sure the hurricanes had an impact specifically here. The ISM said the growth in services came despite the hurricanes and "respondents' comments indicate a good outlook for business conditions."

Notwithstanding the headline jump in confidence, the number of industries of the 18 surveyed that saw growth remained at 15 for a 3rd straight month.

Bottom line, the headline ISM services print was impressive but there really wasn't much of a change in the number of industries seeing growth. Internally, 15 industries saw new order growth vs 14 in August and vs 16 a few months ago. With employment, 10 industries saw growth vs 11 last month. With backlogs, only 8 saw growth, the same pace as August. Also of note and as seen with the manufacturing indices, Markit's version of US business activity was not as optimistic.

Markit said its PMI services index fell to 55.3 from 56 in August and vs 54.7 in July. The average over the past 3 yrs is 54.3. New orders fell slightly m/o/m from the 2 yr high in August. Employment fell to a 3 month low. Backlogs fell too to barely above 50. Overall activity expectations fell to a 7 month low. "Service sector firms noted that positive sentiment was linked to new business growth, although some respondents noted that there was heightened uncertainty surrounding future economic conditions." The main similarity between ISM and Markit was on the acceleration in price pressures. "On the price front, the rates of both input cost and output charge inflation accelerated in September. Cost burdens faced by service providers increased at the fastest pace since June 2015. A number of companies attributed the rise to recent hurricanes, which impacted energy, fuel and raw material prices. Average charges increased further, with inflation accelerating slightly to reach the quickest since September 2014."

Markit bottom lined their manufacturing and services composite index by saying "future optimism is at its lowest since February, suggesting companies have become increasingly cautious about the outlook."

Again, quite the difference in tone between the two surveys measuring the exact same sector of the US economy. As the market mostly follows ISM, US treasury yields did lift in response and the US dollar bounced off its early morning lows.

Telsa's (TSLA) steep ascent over the last several days and weeks on relatively bad news reminds me of the last days of Rome.

Stated simply.

I'm adding further to my PowerShares QQQ Trust (QQQ) puts and eliminating my ProShares UltraShort QQQ (QID) long now (lost $0.15) in its stead.

Less money, more leverage!

I further added to my Trade of the Week -- October $145.50 PowerShares QQQ Trust (QQQ) puts -- on the small rally in the Nasdaq this morning.

Disney CEO Bob Iger described the "back story" between Twitter (TWTR) and Disney (DIS) in yesterday's Vanity Fair conference.

From Mikey, my South Team partner (in Real Money Pro Conference and Golf Tournament I and II), discusses a subject that both Jimmy Cramer and I wrote about this morning:badgolfer22 • 19 minutes ago

When I trained as a trader and market maker, one of the rules my mentor taught me was that the market never discounts the same news twice. But this market ceased discounting several years ago mostly because of what dougie's thesis is above.

Case in point. This is not new news in TEVA. The patent expiration has been talked about on this drug for months and months. It's precisely why the stock is down 80%...that and an ill advised acquisition of Actavis.

So when I saw this news this morning, in the old days I might have jumped on it and bought some stock ...or more stock in this case. My avg is just below 18.

But I don't have the confidence any more that anything has been discounted here. I 'think' it has, but what we keep seeing in this mkt are stocks and sectors that have been for sale...keep being for sale. And those stocks and sectors that have been moving up..keep moving up.

As I've said for years on end now , the pricing mechanism is broken, and I don't have any confidence that the common sense and technical skills I have work near as well any more.

but this too shall pass as dougie says.

But dougie, I warn you, when this Fed created frankenstein mkt meets its inglorious end, and the incessant buying turns into incessant selling, don't try to explain to me that the SPX is 10% undervalued, or 15% or 20%....it won't matter in the short or intermediate term. Just like it hasn't for so long on the upside.

They'll get cheaper next time than historic bear mkt bottoms in my humble opinion. ETF buyers don't care about valuations. Most have no clue as to what a P/E is or any fundamental measure. When they're down 40% they won't care that the market is 'cheap'.

count on it. ok off my soap box now.

The market is what it is. deal with it.

As mentioned Monday I have accumulated a put position in PowerShares QQQ Trust (QQQ) -- the October QQQ $145.50 puts are my "Trade of the Week" (my cost is about $1.60). As I wrote:

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.

This morning several key components of the Nasdaq -- Apple (AAPL) and Amazon (AMZN) among them -- are in the news.

I believe more of this is likely to occur in the next 12 months on the tax, regulatory and antitrust fronts.

As I wrote last week, I would sell the FANGs.

My good friend Peter Boockvar, chief market analyst with The Lindsey Group, discusses sentiment and other stuff, including the latest ADP jobs data way below:

A day after the CNN Fear/Greed index closed the day at 92 (ranges from 0-100), Investors Intelligence said Bulls rose to 57.5 w/o/w to the most since early August and up from 54.3 last week. Its multi month low was 47.1 in September and was above 60 a few times this year. Most of the new Bulls came out of the Correction side as Bears were little changed at 17 from 17.1. The spread between Bulls and Bears is the biggest since early August. This also comes after the 20 yr high in one measure of an overbought condition called RSI in the Russell 2000 at 96 over the past 7 days (also between 0-100). Bottom line, what we've seen this year was the sentiment set up for a market rally was when Bulls were around 50 and stocks stalled out and consolidated when Bulls were around 60.

Ahead of the ADP jobs data which of course will be highly influenced by the hurricanes aftermath and the ISM services index, we know the auto data for September saw big upside. A combination of vehicle replacement of those that got wrecked in the storms (I saw an estimate that 600,000 will need to be replaced in Texas and Florida) and the highest incentive month on record with an average of $4,048 per vehicle enticement said JD Power. The head of sales at Ford said 25% of its growth in September was due to sales in the metro Houston area.

Notwithstanding the strong auto sales which came after seeing the better ISM manufacturing number on Monday(although Markit did not confirm), and of course in the midst of tax cut euphoria in the stock market, the US 2s/10s spread sits at just 85 bps. It was at 136 at the end of last year soon after the election. Let's be honest here people, the US economy is still pretty mixed. Positively, the capital spending numbers have improved and exports have been good but US consumer spending remains mediocre, the housing data has been really so-so lately, commercial real estate is softening, C&I loans are up just 2.2% y/o/y and the auto strength is just hurricane related. Lastly, look at this chart from the monthly Philadelphia Fed State Coincident Indicator reported on Monday that measures at the state level for all 50 states nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by CPI and all are wrapped up in some model. It is a diffusion index:

PHILADELPHIA FED COINCIDENT ONE MONTH DIFFUSION INDEX

The MBA said mortgage applications to buy a home rose 1% w/o/w and are up 4.7% y/o/y. We know all the issues, challenges and opportunities in the housing market so I won't restate them all here but just to repeat the most important being pricing (record highs), inventories and the low ratio of purchases by first time households (mostly millennials). Refi applications though fell 1.8% w/o/w, down for a 3rd straight week and lower by 25.3% y/o/y. This y/o/y number is getting smaller as we recycle thru the tough comparisons. The average 30 yr mortgage rate is near a 2 month high at 4.12%.

In an interesting admission, Stanley Fischer in an interview this morning on Bloomberg said "low rates have been less successful than we expected." I'm tempted to respond here but I'll control myself. Mr. Fischer is retiring next week so won't be voting in December but he said "I still believe we will have higher inflation. The basic mechanism here is unemployment is declining all the time, wages will start going up at some stage."

If you want to watch the fallout from the Trump comment on Puerto Rico debt, look at the GO maturing on July 1st2035 with a coupon of 8%. S&P and Fitch rate it with a D and Moody's has it at Caa3. It closed yesterday at $.44 on the dollar vs $.57 one month ago.

The Japanese services PMI fell to 51 from 51.6. This is the weakest print since October and comes after the 10 yr high in the manufacturing Tankan report and reminds us all the still uneven nature of the Japanese economic recovery. New orders were the weakest since November 2016 while job growth was modest. On the pricing front, these words from Markit should make the BoJ happy, "Cost burdens facing Japanese service providers increased in September as has been the case since November 2012. Panelists indicated that staff shortages had driven up labor costs, while hikes in fuel and raw material prices had placed additional upward pressure on input costs." What did this mean for prices received? "Services providers raised their charges to the greatest extent in 26 months in September. According to panelists, higher charges generally reflected greater input costs. Nonetheless, the rate of charge inflation remained modest." The 40 yr JGB yield is down by 2 bps after touching a 20 month high yesterday. The yen is up and the Nikkei closed flat.

The services PMI in the eurozone was revised to 55.8 from the 1st print of 55.6 and that is up 1.1 pts m/o/m. The peak seen this year was 56.4 in April. Similar to Japan, manufacturing has seen the greater strength in activity but services businesses are still doing well in Europe. Business optimism in this area did rise to a 4 month high. Germany, France, Spain and Ireland all saw a good month. Italy was the disappointment "with output rising at the slowest pace since March." With respect to inflation, "Price pressures increased during September. Average input costs rose at the quickest rate in 5 months, leading to the steepest inflation of selling prices since March."

Of note market wise in Europe is the continued pressure in Spain after the Catalonia vote. The IBEX is down another 2.5% and weaker by 3.7% for the week and is at the lowest level since March. Its 10 yr yield is up by 3 bps to 1.75%, the highest since March and its spread to the 10 yr German bund is the widest since late April.

After seeing an unexpected decline in August German retail sales last week, today we saw they fell for the entire region m/o/m in August by .5% instead of rising by .3% as forecasted. I won't yet jump to any conclusion.

The UK services PMI rose .4 pts to 53.6 and slightly above the estimate of no change. The average year to date is 54. The fly in the data showed new orders rose at the slowest rate since August 2016 and "the net balance of survey respondents anticipating a rise in business activity over the next 12 months was the lowest since June, meaning that business confidence remained close to its weakest since the end of 2011." Markit did say there was definite "anxiety about the wider economic outlook and the prospect of continued political uncertainty ahead." The inflation component rose to the quickest pace since April and expect a BoE rate hike in early November but the paralysis of Brexit that has overwhelmed the BoE doesn't point to a progression of hikes just yet. Along with the general US dollar weakness today, the pound is higher and Gilt yields are slightly lower.

And Peter interprets this morning's ADP jobs data:

ADP said in September that 135k private sector jobs were created smack on the estimate of 135k (I've never seen that before in a jobs figure) and vs 228k in August which was revised down by 7k. It was medium and large businesses that drove the job growth as small businesses, particularly those with less than 20 employees, shed workers. There was only 88k service sector jobs added (declines seen in trade/transportation/utilities and information) while construction jobs grew by 29k and manufacturing was higher by 18k. 

Bottom line, we know the hurricanes impacted the jobs market so we'll give this number a pass. However, something completely unrelated and which goes to the heart of where we stand in the labor market right now, "The continued slow down we have seen in small business hiring could be due to a lack of competitive compensation to attract skilled talent" according to someone at ADP. In fact, we've seen supply issues with labor this entire economic recovery that has prevented faster economic growth. US Treasuries didn't budge as the number was basically in line with expectations with the revision included. The estimate for the BLS number on Friday is just 80k.

"At this time 85 years ago, Yale economist Irving Fisher was jubilant. "Stock prices have reached what looks like a permanently high plateau," he rejoicedin the pages of The New York Times. That dry pronunciation would go on to be one of his most frequently quoted predictions -- but only because history would record his declaration as one of the wrongest market readings of all time."

--Time Magazine, "The Worst Stock Tip In History"

In Jim "El Capitan" Cramer's opening missive today he analytically addresses the active vs. passive conflict, which helps explain the market's steady bullish action. As Jim writes:

"Theanswer is that there are two kinds of sellers in this market: hedge fund sellers, who react off of research, and portfolio shufflers, who buy and sell ETFs and index funds.

The former jump on anything, right or wrong, as long as it is actionable. Sure, if PepsiCo (PEP) has an organic growth shortfall, as we said could happen in our Action Alerts PLUS bulletins last week about PEP, it could get hammered. That's a change in the margin of a bad group. But most of the "valuation" calls analysts make, shy of catalysts, only produce hedge fund jumps.

The latter, the index funds and ETF traders, rarely jump although they may press down harder on a bedraggled ETF, like one that includes the consumer products group.

But there are two kinds of buyers. The opportunistic buyers and the index buyers. The opportunists think that the downgrades are noise and give them a chance to buy high quality stocks with the money that comes in over the transom.

The index and ETF buyers? Well, they just buy.

The dichotomy explains a lot of the bullish action, and isn't talked about enough. You see the sellers off those research calls? They were either shorts, or people who hadn't done their homework, because nothing really happened to justify their actions.

But the buyers?

They lurk and wait and pounce."

I am in basic agreement with Jim but would differ a bit in my interpretation of why dips are bought and how sustainable that buying is.

ETFs and index funds, when faced with a constant and large inflow of funds, are always rebalancing and buying, which is why all dips are purchased. But sizable net inflows may not be seen over time as a constant state, because at some point there will be outflows and that steady dip buying and demand for stocks could disappear almost immediately. To be sure, attempts to give reasons why investor sentiment, now buoyant (see the latest CNN Fear & Greed Index), may erode have fallen on deaf ears this year. But ebbs and flows are a more natural condition of the markets, and as sure as night follows day, the outflows at some point will return. And if ETFs sell, who will be left to buy?

Second, another source of dip buying, as mentioned below (and not covered by Jimmy), are the quant funds that are influenced by a conditioning in the algorithms to buy weakness. That buying has nothing to do with fundamentals, as machines are agnostic to the value -- or lack of value -- inherent in the income statement, balance sheets and replacement values of the constituent stocks. And, of course, traders who worship at the altar of price momentum are now following the dip buying of quant funds.

Third, money is coming out of active managers in favor of passive investing (i.e., ETFs and quants) . Many high-profile and successful managers have closed. Hedge funds -- the catalyst for fundamental-based selling that Jim describes -- no longer hold the sort of influence that they have in the past.

The Virtuous Circle

The dominance and impact of these three constituents -- inflows into ETFs, an expansion in quants' influence and the contraction taking place in hedge funds -- explain a lot about the dip buying that has existed over the last year and the current virtuous circle of demand versus supply.

I recently added up some other reasons for the dip buying.

From my perch, stocks continue to be buoyed by some of the following conditions:

* Massive injections of liquidity from the world's central bankers

* Passive investing (quants and ETFs) are now dominating markets (at nearly 40%) at the margin

* Machines and algorithms, as well as many individual investors, are behaving differently as they are now programmed and conditioned to buy the dips

* 17% of the listed shares outstanding have been retired in corporate stock repurchases since the Generational Low in March, 2009.

* More than half of the listed companies on the exchanges have disappeared over the last eight years

* We have a Bull Market in Complacency

--Kass Diary, "A Bull Market in Complacency"

Mylan's (MYL) drug approval announced this morning is a big negative for Teva Pharmaceutical Industries (TEVA) and likely will result in a $3 to $5 drop in Allergan's (AGN) shares in the early going.

Check out the latest CNN Fear & Greed Index.