As I mentioned last month, Caterpillar would be a pillar in which the bulls could stand upon. It just so happens that in the more recent times this pillar of strength has been sinking into the sand. I recall looking at CAT when it was priced at around $100 in mid January. Guess where it is today? My thought process for avoiding the purchase was that globally the economies were weak and the stock price of CAT would reflect this. Now we are four months into the bull market of 2012 and this CAT sits perched right where it started the year.

I have been bearish for quite sometime, so much so, it may have in fact caused me to miss the rally at the beginning of the year. Today I feel slighted for letting go of my VXX bull gun. I couldn’t take the pain anymore and capitulated quite some time ago. Looking back this may have been a foul move as the VXX looks to possibly make some real moves in the coming future. Before I put my bearish words to practice and buy back in, I will wait and see. This may seem a cop out to many of you, but less then a week ago we were in the driver seat of a crazy bull market, which was running over valuations and possibly could have steamrolled through weak earnings. With big earnings on the horizon and valuation up due to the recent stock rally, one must wait and see if the earning meet these inflated expectations. To jump in and out of the market as momentum swings one way or another is a fools errand, let the market settle out, and hopefully turn bearish to support my thesis.

There is no question that Apple has dominance in the smart phone market. This is prevalent through the fact that I helped my dear old mother purchase the advice yesterday. She had to have an iPhone to listen to her classic hits in her car and join in the words of friends mania that entice her friends into long hours of intense play. My concerns do not fall with the smart phone dominance of the great apple. That is more than obvious and was confirmed when the Sprint representative exclaimed “yeah we barely sell 10 a month,” as I ask him how many Blackberrys they sell nowadays.

The story is the same again and again, no matter which analyst mouth it comes out of. The Apple iTV is set to change the world of the television industry. Apple did without doubt revolutionize the smart phone industry. Though to sit here and say that the Apple success can be replicated once again, sounds more like a gamble that smart stock picking. So I pose the question; What if iTV is not the next big thing?

First off, one of the key important selling points of the iPhone, is not just their capabilities, but its price. To go and make a purchase of the price magnitude of the iTV one will have a hard fought consumer dilemma. Yes Apple has succeed at selling iPads at a price point higher then the iPhone. Though through the lowering of the price of the old iPad and the old iPhone it is obvious that Apple realizes that their high priced products are just that, priced high. The new iTV will likely have some great features, but will those features suggest the astronomical price that goes along with it? The market for TV’s is large and fierce, not only that but developed. For apple to break into this market will be a significant challenge particularly at the price points the rumors suggest.

Second point of concern, is the sentiment regarding the stock price. The argument for the growth in the iPhone market seems somewhat valid, yes there will be other global markets to grasp in the future. Yes there will be the new phone cycle selling more iPhones. Though as the shares of Apple come into a more realistic valuation, the new argument for the stock to go higher is that the iTV and the iPad will be as much of a growth for the company as phones. Yes these products will sell and may sell decently. They are good quality products and Apple has a following. Though one cannot sit here and tell me that the iTV will move 40 million units, or anywhere in that bracket. That is suggesting that Sony and Samsung will cut there market share in half, handing it over to Apple. As we have seen in the recent months, multiple tech companies are gunning for apples iPad and the same will be the case for the iTV. The major players in the TV space are just that, major players, and aren’t going to walk away from there bread and butter like RIM did. Apple is entering a market where the fight will be fierce and gaining market share will be a true challenge.

Apple makes great products, I have some myself. Though before one can say that the stock price is going to infinity with conviction, we must consider all the factors. Some of those were brought up above, such as the pricing challenges and intense competition in Apples future. Many more challenges will surface in the future, as we know will tech companies, the future is coming quickly and continually staying a tech titan is nearly impossible.

“Our goal is to make the best devices in the world, not to be the biggest” – Steve Jobs

It is quite obvious that the market is down today. This may be a shocker to most, but the market can trade down and will. Not only that, but the ammunition for trading lower is by no means in no short supply. Everything from U.S. housing to a weak global economy are bullets in the gun to this potentially bearish market. What concerns me is not today, tomorrow, or the next week. What concerns me is the day when we have completed a so called correction. On that day when the market is finally down 5%, 7%, 10% or more, one must ask, will I be a buyer?

It is always good practice to buy things when they are cheaper. As traders and investors we buy stocks that we think will gain value in the future, this is why we buy on dips or in places we see bargains. That being said, would you buy after this correction, when and where it occurs? When evaluating this question, we must think about one thing, and one thing only; Why is the market trading down? If the market is trading down because its gotten to big for its britches, that is understandable. If the market is trading down because profit taking is occurring, that is also understandable. If the market is trading down due to economic concerns here and abroad, then one should be very concerned. For quite some time the U.S. has not been correlated with the economies of the rest of the world. When this correlation resurfaces, only fools will be the one buying the dips, or calling the bottom. If you are bargain hunting, be leery, what you can get today for $10 you may be able to get tomorrow for $5.

On Friday afternoon I was speaking to another trader. One who may be more bearish then myself on the current U.S. and global economic situation (if that’s at all possible). Our discussion led us to the conclusion that things had traded irrationally considering the current financial obstacles. The headwinds home and abroad are so great in the next few years, ones money should be very scared. the conversation concluded with an  one important point in which we both agreed, the fact that you can’t fight where the money is going. If the money is going into stock, the will go higher; if the money is going into the tech sector, the tech sector will go higher.

Over the past few months in the anticipation of the Facebook IPO investors have been crazy about tech stocks. Look at things like Zynga, Yelp, Apple, and so on. One can make an argument for or against each individual company. Stating that one is overvalued or another is undervalued, one company has more revenues while another has none. What most investors are failing to realize, is valuation doesn’t matter. Most of these companies are new, sleek, and hot. Some of them have ridiculous potential, while others do not. Though they all have one aspect in common, people are buying them. If Curly, Larry, and Moe are buying tech, then you should too. The previous statement may sound uneducated and ignorant, but the fact of the matter is that we are living with a financial markets that are trading a certain way, so play the game by the new rules or get burned.

You can sit there and say that valuations are off, that you don’t want to buy the hype. All these aspects may hold true. What I have learned and you should have learned too over the last quarter, is that if the markets wants to go higher, they will. Headwinds seem to be insignificant and obviously the tech valuation headwinds are insignificant as well. Don’t fight the trend, just ask those who have been buying the VIX in attempt to fight it, they’re broke. Follow the money, because if you don’t, the money trains leaving the station without you.