Stocks Sharply Lower into Final Hour on Fed Comments and Housing Worries

BOTTOM LINE: The Portfolio is about unchanged into the final hour as losses in my Retail longs and Medical longs are offsetting gains in my Index ETF shorts, Energy-related shorts and Base Metal shorts. I took profits in my (QQQQ) and (IWM) shorts this morning and then added back to them, thus leaving the Portfolio 25% net long. The tone of the market is very negative as the advance/decline line is substantially lower, almost every sector is declining and volume is above average. I posted a few weeks ago that the outperformance by the Morgan Stanley Cyclical Index (CYC) over the Morgan Stanley Consumer Index (CMR) had never been greater. The spread between the two peaked eight days later. Since then, the CYC is down 8.3%, while the CMR is down 2.8%. I expect this trend to continue over the intermediate term. I expect US stocks to trade mixed into the close from current levels as short-covering and bargain hunting offset economic worries.