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Intraday Market Notes: For-Profit Educators Sinking Fast -- October 17

4:00 pm ET: The major averages continued in rally mode and the burning question now is whether they can keep it up. They're still not back to their September highs, although the S&P is getting close. Their daily charts are showing a series of lower lows and lower highs--a bearish pattern--and one that is especially pronounced in the chart of the Nasdaq. The fact that the VIX is still hanging above support is a sign that this rally still has some juice left.

For-profit educators took it on the chin today as the Apollo Group (NASDAQ:APOL), operator of the University of Phoenix, reported disastrous numbers. How bad were they? Fourth quarter revenues were off by 60%. The company issued full-year guidance well-below the Street's expectations forcing management to close 115 campuses. The stock got walloped ending the day 22% below yesterday's close to a level not seen in over ten years amid myriad analyst downgrades (didn't they see this coming?). The rest of the group suffered along with it as both Strayer (NASDAQ:STRA) and ITT (NYSE:ESI) both hit new lows. This group will likely see further contraction as they begin to compete with cheap online alternatives offered by traditional universities. (My alma mater, MIT, is a pioneer in this area.)

In commodities, the cotton etf (NYSEARCA:BAL) broke out of a four month base on heavy volume while one water etf (NYSEARCA:FIW) broke major resistance to make a new high.

That's about it for now.

Note to Subscribers: There is one new Stock Darling. My candidate for Stock of the Day blew up as further research indicated possible stock manipulation. I shall strive to replace it.

Stocks: BAL, FIW, APOL, ESI, STRA