Stocks Sharply Lower into Final Hour on Weakness in Financials

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Internet longs, Telecom longs, Biotech longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very negative as the advance/decline line is substantially lower, every sector is declining and volume is only modestly above average. Today's sell-off, while painful for the bulls, is on much lower volume than that of the one 10 days ago. As well, the latest push lower over the last hour, which seemed to be spurred by the announcement that Massachusetts is going to subpoena UBS (UBS) and Bear Stearns (BSC) over subprime research, is on lower volume than that of the decline earlier in the day. Oil is now coming under significant pressure, falling over $2 per barrel from session highs and breaking convincingly lower through its recent uptrend. A number of market-leading stocks also made higher lows during this last push lower. The NYSE Arms is soaring to very elevated levels of 3.73, despite only a modest up-tick in volume. This may indicate the sellers are running out of firepower. The VIX is rocketing 30%. I expect US stocks to trade modestly higher into the close from current levels on falling energy prices, bargain-hunting and short-covering.