Stocks Lower into Final Hour on Iran Concerns, Weakness in Homebuilders

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Technology longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, almost every sector is lower and volume is about average. Merrill Lynch put out its monthly short interest report today. It said that its composite Average Short Interest Ratio (ASIR) model for the S&P 1500 soared to a record 7.2 during mid-February through mid-March vs. 5.7 the prior month. This is an all-time record high level. The ASIR S&P 1500 model is now above two standard deviations from its historical average. Merrill said that short levels are clearly higher in the small- to mid-cap space with a concentration in the consumer discretionary, utility and financial sectors. This may be why the average stock is holding up better than the major averages. As I said the other day, there is a huge wall of worry for stocks to climb substantially from current levels by year-end. I expect US stocks to trade mixed-to-higher into the close on short-covering and bargain-hunting.