Stocks Rebounding into Final Hour on Report of Ambac Financial Bailout

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs, Semi longs and Biotech longs. I covered some of my (IWM)/(QQQQ) hedges and was stopped out of my (SIGM) long today, thus leaving the Portfolio 75% net long. The overall tone of the market is negative as the advance/decline line is substantially lower, almost every sector is falling and volume is about average. Investor anxiety is high. Today’s overall market action is bearish. The VIX is rising 2.3% today to a high 25.7. The ISE Sentiment Index is a very low 88.0 and the total put/call is a high 1.21 today. Finally, the NYSE Arms has been running high all day and is current 1.41. I do not see any real fundamental reason for the severe weakness today in (SIGM), however my strategy dictates that I step aside for now. I plan to re-enter the position later this year. I am seeing a number of other stocks break down for little or no apparent reason, which is a negative. The Shanghai Composite fell another 3.5% last night and is close to testing its recent low. The index is now down 28.6% from its high of last October. Recent weakness in emerging Asia could be one of the main reasons for recent selling in the US technology sector. CNBC just reported that a bailout for (ABK), that would allow it to retain its AAA rating, is in the works and could occur by next Tuesday. This would be a large positive for the broad market. Stocks are surging on the news. Nikkei futures indicate a -145 open in Japan and DAX futures indicate a -10 open in Germany on Monday. I expect US stocks to trade modestly higher into the close from current levels on short covering and bargain hunting.