Monday, January 22, 2007

Stocks Lower into Final Hour on Emerging Market Concerns and Weakness in Cyclicals

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Retail longs and Computer longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mostly negative and volume is above average. The major averages are still solidly lower, however I am seeing some encouraging signs as oil is reversing hard again, falling $2/bbl. from session highs. It is unusual of late to see oil sell off like this on contract expiration day. A number of market-leading stocks seem to have stabilized. American Express(AXP) just announced earnings slightly below estimates, however the stock is rising from session lows. Financials have been holding up relatively well. As well, a number of medical tech and biotech stocks are displaying relative strength. Venezuela is trading down over 6% and has plunged 28% in two weeks. The NYSE Arms has been running at above average levels most of the day. The latest figures from the NYSE show short interest rose again in the most recent month and is very close to a new record high. I expect US stocks to trade mixed into the close from current levels as lower oil prices offset emerging market concerns.

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