Stocks Lower into Final Hour on Healthy Profit-taking

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs, Gaming longs and Computer longs. I have not traded 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 below average. Investor anxiety is above average. Today’s overall market action is mildly bearish. The VIX is rising 1.3% and remains above average at 22.7. The ISE Sentiment Index is a low 105.0 and the total put/call is an above-average 1.12. Finally, the NYSE Arms has been running above average most of the day and is currently 1.14. Weekly retail sales rose 1.1% this week versus 1.1% the prior week and up from .5% the first week of March. There seems to be much angst over the upcoming release of March chain store sales this Thursday. However, I suspect sales will modestly exceed the .9% estimate, which should provide a positive catalyst for the broad market. Nuance Communications(NUAN), one of my longs, announced the acquisition of eScription today, which is boosting the stock 5.4%. This purchase has many strategic benefits and gives the company a competitive advantage in the North American medical transcription market, which offers a very large opportunity. Nikkei futures indicate an +55 open in Japan and DAX futures indicate an +52 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.