Stocks Mostly Lower into Final Hour on Rise in Commodities, Long-term Rates

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Internet longs, Semi longs and Commodity shorts. I added (IWM)/(QQQQ) hedges and took a loss on my (OMCL) long 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, most sectors are declining and volume is below average. Investor anxiety is above average. Today’s overall market action is bearish. The VIX is rising 4.2% today to a high 26.1. The ISE Sentiment Index is a below average 110.0 and the total put/call is an above-average .99 today. Tech, retail, financials and airlines are under pressure today from the rise in commodities and long-term rates. The rise in commodities is boosting inflation worries, at a time of significant economic concern, which is a large negative. Investors are worried that this may prevent an otherwise more aggressive response to the ongoing housing/credit problems from the Fed. The odds of a 75 basis point cut at the March 18^th meeting are down to 2% today from 32% on Friday. If the commodity rise continues, I would expect to begin to hear slightly more hawkish Fed commentary. The decline in my (SIGM) long looks like a severe overreaction to today’s Robert Baird downgrade of the stock to Neutral and $50 target, however I have not added to the position yet. Nikkei futures indicate a -100 open in Japan and DAX futures indicate a -7 open in Germany. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting and short-covering.