Back in late 2007, real estate mogul Sam Zell said to CNBC’s Maria Bartiromo that what caused the market declines was uncertainty. He said that if the market had visibility going forward about Fed Policy and pricing of the toxic paper, no matter what the pricings would be, the market would rise a great amount because the uncertainty in asset prices going forward would be eliminated.

Of course, back then the market declines were miniscule compared to today and that it was unthinkable such financial giants as Bear Stearns and Lehman would go under, and many iconic mega banks would be under the nationalization risks.

Again, another huge pullback in the market and a bank failure just before the next Fed meeting. Coincidence? Maybe. Hard to believe though. The market has been successful each time it has tried to pressure the Fed into cutting rates so far. This time Lehman (LEH) is the victim. I can understand that Lehman was in bad shape. But the fact that traders seemed to realize this just before the Fed meeting is odd, at best. The stock traded in the $15-20 range for months, and then in just a couple of days, people realize that the stock is worth $3, trading a billion shares.

The Fed is keeping its hand strong though. Bernanke knows that if they lower the rates as the short-cutters on Wall Street want him to, the dollar will take a big hit, damaging the US consumer. Plus, from the very beginning, the Fed knew that lowering rates would not solve the problems of the US financial firms. But they had no other choice. The rates were going to be lowered at some point anyway and back then there was no point in pushing the S&P down to 900 by being stubborn. However, this time fundamentals are different. The rates are low enough that housing can bounce back.

Last Friday, September 5th, the dollar was up almost half a percent against the Euro and most other currencies despite a spectacularly horrible jobs report, but it seems to be overshadowed by Freddie (FRE) and Fannie (FNM) in traders’ mind. In one of my previous posts I had talked about the dominance of the currency markets over the equity and commodity markets in predicting the future market trends and overall state of the economy. I had reasoned that this relative power is due to the fact that currency markets are larger than the other two by a huge margin and therefore are not easily manipulated.

Another interesting event that took place last Friday was that the banks bottomed around 11 am and rose through the remainder of the trading day, taking the whole market up with them. Now I am not one of those whiners who constantly complains about insider trading and how the Wall Street manipulates and robs the ordinary investor. However, given the sequence of events last Friday, it is not hard to imagine that a whole lot of people knew about the GSE rescue package before we, the ordinary folks, got the news after the closing bell.

Apple (AAPL) has been one of the best performing stocks of the last two years. The stock has gone from $45 to $180 in about a year and a half, which is impressive especially given the size of the company. The nature of the rise was momentum trading at its core; however I must admit that the ascent was also supported by very solid fundamentals. The company has continuously beaten both its top and bottom line by a large margin, while Steve Jobs and his team has brought about some of the most revolutionary products of the last decade to the market.

As an equity investment, however, I think that Apple has found itself struggling with multiple headwinds lately and therefore I think the stock will perform poorly, at least relative to the overall market, in the mid-term. I detailed these headwinds below and I am curious to hear back from all of you Apple fans out there. I don’t trade the Apple stock but as a trading story the stock has really struck me as a case study and I continue to follow the news about Apple.

Over the last couple of days, the market’s reaction to the bad news surrounding the housing and financial sector is, I believe, quite insightful about the psychology of the market and the reason for the substantial daily swings. The main concern seems to be the fear of another mortgage underwriter or investment bank going under. I can’t help but realize how the market psychology about this so-called “bad news” is extremely similar to late 2006/early 2007, at the height of the M&A boom; only this time, market dynamics are reversed.

You might be surprised how one can say that a market which refused go down despite the burst of the housing bubble, and a market which refuses to pick itself up despite a host of economic incentives, might be similar. Well, the similarity lies in the fact that traders seem to trade sectors, not individual stocks.

Given the three false bursts of the oil bubble since oil started its ascent in mid-2007, investors are skeptical about the recent fall in commodity prices.

The main reason is that oil prices seem to move very quickly in large percentages, bringing with it the opportunity to erase a month of declines within two or three days.