Stocks Falling into Final Hour on Financial Sector Rumors, Global Growth Concerns

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Medical longs, Biotech longs, Commodity shorts and Emerging Market shorts. I added (IWM)/(QQQQ) hedges, added to some of my commodity shorts and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The overall tone of the market is bearish as the advance/decline line is lower, most sectors are declining and volume is above-average. Investor anxiety is elevated. Today’s overall market action is mildly bearish. The VIX is jumping 11.5% to a very high 28.8. The ISE Sentiment Index is a depressed 67.0 and the total put/call is a high 1.17. Finally, the NYSE Arms has been above average most of the day and is currently 1.5. The TED spread is rising to 198 basis points and the 3-month T-bill yield is dropping to .61% today, which are negatives The S&P Goldman Ag Commodity Index is breaking below its 50-day moving-average and appears to have made a major double-top. The (DBA) ETF is also breaking below its 50-day moving-average. I continue to believe a bursting of the current commodity bubble, while likely a short-term negative for the broad market, would be a major positive over the intermediate to long-term. Emerging market equities, which are especially sensitive to commodities, will likely come under meaningful pressure again tonight. On the positive side, many growth stock leaders are outperforming substantially today. The 30-day asset backed commercial paper yield is falling 28 basis points to 2.67%, the lowest level since March 2005. Nikkei futures indicate a -200 open in Japan and DAX futures indicate a -60 open in Germany tomorrow. I expect US stocks to trade modestly lower into the close from current levels on worries over global growth and financial sector rumors.