Stocks Lower into Final Hour on Profit-taking, Shorting

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Medical longs and Internet longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is mildly negative as the advance/decline line is slightly lower, most sectors are declining and volume is below average. Investor anxiety is above average. Today’s overall market action is just mildly bearish given recent gains. The most technically extended financial, homebuilding and retail shares are under the most pressure today. The VIX is rising 7.0% today to a high 26.0. The ISE Sentiment Index hit a depressed 77.0 and the total put/call hit an above average 1.13 this morning. Finally, the NYSE Arms has been running high all day at 1.55, which is a positive, especially given below average volume. Overall, today’s action looks like a healthy low-volume consolidation of recent gains. Many growth stocks are higher on the day despite ongoing weakness in some of the leaders. I continue to believe pullbacks will remain relatively mild and short-term in nature and should be bought. Nikkei futures indicate a -75 open in Japan and DAX futures indicate a -5 open in Germany. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic pessimism and short-covering.