Stocks Lower into Final Hour on Weakness in Telecom, Insurance and Financial Shares

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Software longs and Semi 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 substantially lower, most sectors are declining and volume is heavy. Investor anxiety is high again. Today’s overall market action is bearish. The total put/call hit a high 1.33 and the ISE Sentiment Index hit a very low 66.0 today. For the second day in a row, the Morgan Stanley Tech sector index is substantially outperforming. Large and mid-cap “growth” stocks are also substantially outperforming “value” stocks. Steel, Computer Hardware, Semi, Computer Service, Construction, Homebuilding, Retail, Restaurant, Airline, Railroad, Software and Energy stocks are all higher or just slightly lower on the day. Cyclical stocks are slightly higher on the day, as well. A number of market leading stocks continue to trade as though they are “washed out” and are under accumulation even as the major averages tick lower. The ECRI Weekly Leading Index has bounced strongly the last two weeks from 134.60 to 137.40. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain hunting.