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Intraday Market Notes: Metals Are Tarnishing -- October 23

|Includes:DBC, DBO, DBP, GLD, iShares Gold Trust ETF (IAU), JJC, JJM, OIL, PGM, PPLT, PTM, SLV, USO

3:30 pm ET: Today's market action can be summed up in one word: divergent. The Dow Transport Index (DTX) is up while the others are down; the Arms Index (Trin) is moving up while the VIX is moving down (they typically move in sync with each other), and the VWAPs (a measure of buying and selling pressure) have been clearly favoring the bulls all day yet there is no sector (and very few commodities other than nat gas (NYSEARCA:UNG)) trading in the green. So, can we glean anything from these conflicting stats and if so, what?

Well, although the VIX is moving down in intraday action, it's at its highest level in several months which is not comforting news if you're long this market. The DTX, considered a leader in market direction, could be signaling a change to the upside for the other indexes and if the Nasdaq can hold above 3000, then I may be persuaded to that line of thinking. However, the DTX has been rangebound for a while and until it can break out of it, I wouldn't hold my breath for any sort of sustained rally to happen in the near-term. In short, you bulls out there should be buying some protection while volatility is still relatively inexpensive because should the VIX break above 20, then I do believe the market direction for the next month or so at least will be down. (A Santa Claus rally could put an end to it, though.)

Apple (NASDAQ:AAPL) released its new iPad Mini today to compete with Nexus tablets, the Kindle Fire, and the Nook. This much antipated event failed to excite investors who punished the stock to the tune of over 2%. Although the product looks appealing, apparently the $329 price for the base model wasn't. I think if Apple doesn't completely trounce earnings estimates this coming Thursday (they report after the bell), the stock could come under further selling pressure.

In other news, the risk-on trade is the trading tune of the day. Stocks, commodities, and foreign currencies continue to sell-off while the greenback (NYSEARCA:UUP) and government bonds climb to the upside. Metals and energy are still bearing the brunt of the sell-off with gold (IAU, GLD), platinum (PLT, PGM, PPLT), silver (NYSEARCA:SLV), copper (NYSEARCA:JJC), precious metals (NYSEARCA:DBP), and industrial metals (NYSEARCA:JJM) all breaking support levels. Combined with the breakdown in oil (USO, OIL, DBO) it's no wonder the commodity etf (NYSEARCA:DBC) gapped below $27.75 support.

That's it for now.

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Stocks: IAU, GLD, JJM, DBP, JJC, PGM, PPLT, PTM, SLV, DBO, USO, OIL, DBC