Stocks Sharply Lower into Final Hour on Lingering Credit Fears

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs, Biotech longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is negative today as the advance/decline line is lower, every sector is declining and volume is very heavy. My intraday gauge of investor angst is elevated again. Mall retail same-store sales, specifically at teen retailers, were disappointing. However, Cosco (COST, +7%), Target (TGT, +6.1%), TJX Corporation (TJX, +5%), Wal-Mart (WMT, +1.9%) and JCPenney (JCP, +10%) were bright spots. The brokers, led by Goldman(GS), are moving to session lows, and this is sending the broad market to new lows. This is one of the most bifrucated days I have ever seen: I have literally hundreds of stocks on my monitor pages higher or barely down today with the DJIA down 300. This is highly unusual and indicates underlying strength, in my opinion. As well, Nasdaq breadth is -929, which is mild considering the headline losses. I still believe longer-term investors should use pullbacks to add to high-quality growth stocks at current levels and use strength to cut back on the most economically sensitive and emerging-market stocks. I expect US stocks to trade higher into the close from current levels on short-covering and bargain hunting.