Stocks Lower into Final Hour on Record Energy Prices, Rising Credit Market Angst, More Shorting

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Software longs, Medical longs and Biotech 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 substantially lower, most sectors are declining and volume is below average. Investor anxiety is high. Today’s overall market action is bearish. The VIX is rising 5.2% and remains above average at 23.5. The ISE Sentiment Index is a low 96.0 and the total put/call is a high 1.18. Finally, the NYSE Arms has been running high most of the day and is currently 1.38. The WSJ is reporting that Yahoo!(YHOO) is in talks to carry search ads from Google(GOOG). This would be a huge positive for (GOOG). The stock is now trading only 2 points higher from when the news hit, which I view as a severe under-reaction. The TED spread is rising 8 basis points to 142 basis points. The G-7 currency volatility index is rising 1.7% to a high 11.3. The European Financial Sector Credit Default Swap Index is rising 10% to 86.7. The Shanghai Composite plunged another 5.5% last night and is back near recent lows, down 44.2% from October of last year. Nikkei futures indicate a -36 open in Japan and DAX futures indicate an +14 open in Germany tomorrow. I expect US stocks to trade mixed into the close from current levels as bargain-hunting offsets more shorting, higher energy prices and rising credit market angst.