Stocks Lower Heading into Final Hour on Profit-taking and Iran Worries

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Internet longs, Software longs, Biotech longs and Semi longs. I took profits in some existing longs and added IWM and QQQQ shorts, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is above average. Measures of investor anxiety are higher. The average 30-year mortgage rate fell to 6.15% this week from 6.21% the prior week. This is the fifth consecutive weekly decline. Mortgage rates are now only 94 basis points away from record lows set in June 2003. The yield on the 10-year Treasury note has fallen 22 basis points in about nine weeks. I continue to expect mortgage rates to remain relatively low by historic standards this year as U.S. growth slows to average levels, demand for U.S. assets increases, inflation readings decelerate and the dollar remains stable. I expect US stocks to trade mixed-to-lower from current levels into the close on profit-taking and worries over Iran.