Wednesday, August 15, 2007

Stocks Lower into Final Hour on Credit Fears and Technical Selling

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs, Semi longs and Internet longs. I took profits in a few of my (IWM)/(QQQQ) hedges, took a bit off the table in my (BHP) short and then added back to my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The overall tone of the market is negative today as the advance/decline line is lower, most sectors are declining and volume is above average. My intraday gauge of investor angst is elevated again. Today was the deadline for redemption notices for some large hedge funds that have been under duress. This could help lift some uncertainty regarding the situation going forward. The Bloomberg Base Metal Spot Index is dropping down through its 50-week moving-average convincingly for the first time since the metal bull market really took off in 2002. I took some profits in my BHP Billiton (BHP) short this morning, however, as it has become too oversold. I plan to build this position back up on any bounce higher to around $60-$62. Biotechnology has displayed notable relative strength of late. Gilead Sciences (GILD) remains my favorite in the group. I expect US stocks to trade mixed-to-lower into the close from current levels on credit fears and technical selling.

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