Stocks Lower into Final Hour on Record Energy Prices, Profit-taking

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Computer longs and Biotech longs. I added (IWM)/(QQQQ) hedges 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 substantially lower, almost every sector is declining and volume is below average. Investor anxiety is slightly above average. Today’s overall market action is bearish. The VIX is rising 3.6% and remains above average at 22.3. The ISE Sentiment Index is slightly below average at 138.0 and the total put/call is above average at 1.07. Finally, the NYSE Arms has been running slightly above average most of the day and is currently 1.09. The rise in energy prices is a large negative. Until oil reverses lower or at least stabilizes, another strong broad market surge higher is unlikely, in my opinion. The 10-year swap spread is falling another 2.0 basis points today to 62.75 basis points over Treasuries. This is down from a high of 92.75 in early March and down 13.45 basis points in three days. Short interest on the NYSE rose again the first two weeks of April and remains right at record levels, despite recent stock gains. Nikkei futures indicate a -57 open in Japan and DAX futures indicate an +20 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on record energy prices, shorting and profit-taking.