Brief and tumultous flash correction is OVER

As of this PM, WTI Crude oil started to bounced back from the 100 level. There seems to be more manufactured fear and over-capitalized futures trading than real scarcity (North Sea Brent and OPEC related) of crude.

NDX was down 100 points in the last two sessions and SPY over 40 points.

HPQ contributed 1/3 of DOW losses today (after announcing 2010 Q4 report after market close last evening) with disappointing topline and bottomline, additionally lowering future estimates. This seems unrelated to management changes since the hyper-growth of the past few years were mostly related to newer products and lowered expectations and not to mention the paradigm shift that Apple brought to the PC/laptop market with the introduction of it's mega-seller, the iPad. Apple is now positioned to take a bite out of HP and Microsoft corporate sales. Additionally, corporations are going away from PC/laptops to cloud environments with a dumb terminal access which means that decade-long cycle of PC/laptop refreshes is giving way to refreshes of only the server-side hardware and software (cloud).

Confirmation mostly in terms of APPL/GOOG and POT/MOS bounce back from their near-term support levels of 165 and 75 respectively.

Damage done to the cost of buying options due to the 40%+ increase in VIX and VXN over the past two days.

Avoid OIH, XLE, SLV, GLD and all oil-sector stocks (XOM, SLB, BHI, CVX, etc.). Not sure if they will continue their way up because of "sustained" higher crude futures.

Stock options may be a better play as profits continue to top estimates. The caveat is that profit margins are at levels never seen before. If bottomlines continue to go up but toplines don't, further gains may be limited. Employment may need to pick up to see improvement in topline estimates. May be, topline estimates are a better guage of employment levels at this point (provided wage inflation isn't creeping in).

FFIV, AAPL, GOOG, MOS, POT seem like ones that will take off again.

I was wrong about OIH and SLV (intraday)

May be because correction was due or may be not. But, going long OIH and SLV turned out to be losing strategy today. Going short with SPY and NDX would have been better. Both these indices are now down better than 2%.

APPL and GOOG down 10+ today, adding to their last session losses. Correction seems to be underway throughout the market. Is this another one of those flash corrections (versus flash crash) that will last but just one day before another uptrend? But, I wouldn't be surprised to see AAPL break its last month lows in the 320s. Google has support at the 600 level.

Consumer Sentiment Index hit 70+ (2-yr high) but might be a lagging indicator. Housing sales down 1% but more vital is the fact that housing prices have been on a slide over the past few months. Shiller was on Bloomberg making his point that this situation will last for years. Need to read Shiller's book (co-authored) "Animal Spirits", which is only $11 on Amazon.com.

Bird-in-hand trade

All Stock futures are down (calling stocks as Equity is a misnomer)
Precious metals (PMs) are UP.
Two trading options:
(a) Go short the already down futures via SPY, NDX
(b) Go long PMs via SLV, GLD

Because of the continued support to the stock futures via or due to Quantitative Easing, the bird-in-hand would be to going with the long trade on the PMs. I'll be buying March ATM options on GLD and SLV.

Straight trading a PM such as Silver is best accomplished via a Leveraged ETF (ProShares Ultra Silver, AGQ, which is 200% Silver position) versus a regular 100% ETF such as SLV. To trade options on these ETFs, it's best to stick with the ETF with the most liquidity and tight bid-ask spread. In the case of Silver, SLV offers the best value to trade options. To trade options on Gold ETF, I can't seem to find anything better than GLD.

Silver and Gold set to move higher

Don't fight the bubble (if that's your perception of the price moves over the last few years or few days), profit from it.