Beware.....

The markets opened up today and the first 4-5 minutes looked pretty promising.

Then the sellers showed up, as I said they would, and suddenly the A/D went in the tank.

For the last three years "buy the dips" has done you well. But overnight the 10 year bond pinged off 5.25%, before falling back; it is currently at 5.141%, up another 5 bips from last night's close.

There is no safe trade here on the long side of the market. There may be in specific stocks (there always is, even in really bad markets!) but in the broader indices? No.

Homebuilders are continuing to get hammered, as one would expect with rising interest rates - and rising they still are. This may put a few of these under in the next couple of quarters, and if I had to take a bet I'd say HOV is the best bet for it, simply on its pauper's cash position on the balance sheet.

The SPX has just broken through the 50DMA to the downside, which is the warning that I was talking about yesterday evening. While the followthrough hasn't happened - yet - a pin is a pin, and pins pop bubbles. We will have to see what happens as the day goes on; if the program trading guys jump on this technical penetration things will get very ugly very fast.

So the "more downside" thing definitely appears to be at risk today. The VIX stepped back from the brink a bit this morning, but if the selling accelerates - and I think it might - that won't hold for very long and more VIX acceleration is going to be seen.

If you're short in June option positions in individual equities consider lightening up this afternoon. I am going to pull "my money" off the table today in those, and let "the house money" run; the last few OpEx weeks have been stupid in terms of thin volume, allowing all sorts of silly things to happen, and I'm tired of the whipsaws. Profit taken is profit in your bank account; my board is silly green the last 3-4 days, and I'd like to keep it that way.

The sole exception is that I may leave my index-linked PUTs open over the weekend. Much will depend on what the price action looks like as we head towards the close.

Oh, in the "Are they really that dumb" department, we have a little ditty this morning on the wires that nobody is paying attention to. Well, I am, and I bet a few more people will be too once they read this :-)

“"If we can milk it along for a few years, we have a chance of recovery,” said Mike Gross, Eestern managing director for Countrywide Home Loans. “Otherwise, your business gets wiped out.”

You have to love someone who craps all over their own company!

The key hours will be around 10:00 AM, 1:00, when traders get back from lunch, and then the last half-hour.

Be careful today.

Have a profitable day!