Stocks Mixed into Final Hour, Consolidating Yesterday's Sharp Gains

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Medical longs and Telecom longs. I added to my (BRCM) long this morning and took profits in another trading long, thus leaving the Portfolio 100% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is average. NYSE short interest, from mid-February through mid-March, surged 10% to a record 10,510,000,000 shares. The second-largest short interest position on the NYSE, behind Ford Motor (F), is in iShares Russell 2000 Index (IWM) at 158,727,133 shares. The IWM is 3.0% higher ytd. and is 21.2% higher since the July bottom last year. Record short interest is playing a major role in recent record margin debt readings. The beginning of the "mother of all short-covering rallies" grows closer by the day, in my opinion. Weekly retail sales are trending higher, jobless claims are trending lower and mortgage applications have been trending higher. After two years of substantial slowing in housing, there is still little evidence of any significant consumer-related weakness as Americans' net worth remains at record high levels.

Here are the 20 NYSE stocks with the largest percentage increase in short interest relative to their float from mid-February through mid-March:

1. AVR +52.6%
2. FMT +28.1%
3. FED +19.7%
4. DSL +19.2%
5. NDE +18.9%
6. WY +14.2%
7. IMH +11.5%
8. NFI +10.1%
9. NYX +9.8%
10. GGC +8.5%
11. AHM +8.1%
12. SGK +8.0%
13. FBC +7.6%
14. CBS +7.6%
15. MTH +7.5%
16. SPC +7.4%
17. MHO +7.4%
18. MTG +7.0%
19. SIX +6.9%
20. CHB +6.9%

I expect US stocks to trade mixed-to-lower into the close on higher energy prices and apprehension ahead of tomorrow morning’s likely weaker-than-expected existing home sales report.