Stocks Mostly Lower into Final Hour on Jump in Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs, Medical longs, Software longs and Retail longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is above average. Investor anxiety is high again. Today’s overall market action is neutral. The VIX is rising 2.7% today to a high 28.40. The ISE Sentiment Index is a low 88.0 and the total put/call hit a high 1.27 this morning. Growth stocks are substantially outperforming value stocks today, with many positing meaningful gains. I suspect another significant rotation is underway. As well, many market leading stocks are firm to higher. This is much healthier, in my opinion, than seeing the most heavily-shorted and beaten up stocks lead the broad market. OPEC’s talk of production cuts, with oil near record highs, and abandoning the US dollar is mind-bogglingly short-sighted, in my opinion, and just raises the odds for an oil price crash in the future. This is likely one of the main reasons energy-related stocks aren’t displaying more upside with oil back above $90/bbl. Moreover, oil at current prices makes it harder for the Fed to maintain its aggressive stance, thus increasing the odds of a more meaningful global slowdown. The 10-year yield is falling 11 basis points today. I expect better economic data over the coming weeks and diminishing bond insurer uncertainty to provide upside catalysts from current levels. (GOOG) is rising for the third day out of the last four. I still think the shares anywhere near current prices are providing investors with an excellent entry point as growth remains very healthy and the p/e multiple begins expanding again. Nikkei futures indicate a -42 open in Japan and DAX futures indicate a +7 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.