Monday, April 07, 2008

Stocks Mostly Lower into Final Hour on Surge in Energy Prices, Profit-taking

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Internet longs and Computer 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 neutral as the advance/decline line is slightly lower, sector performance is mixed and volume is below average. Investor anxiety is slightly above average. Today’s overall market action is neutral. The VIX is falling .7%, but remains above average at 22.3. The ISE Sentiment Index is a below average 117.0 and the total put/call is slightly above average at .95. Finally, the NYSE Arms has been running below average most of the day and is currently .82. The financial ETF(XLF) has a -.93 correlation with the oil ETF(USO). It isn’t surprising to see financials give up much of their morning gains with oil trading back near a record high. I am seeing a number of technical signs that oil could be making a double-top. It is also interesting to note the weakness today in agricultural commodities, despite the rise in energy. The S&P Goldman Ag Spot commodities index is down 1.73% to session lows. Commercials continue building their record short position in gold, while large speculators continue to build their record long position in the metal. I did a link update over the weekend. Please check out the new links on the right-hand side of the page when you get a chance. Nikkei futures indicate an +55 open in Japan and DAX futures indicate an +51 open in Germany on Monday. I expect US stocks to trade mixed-to-lower into the close from current levels on higher energy prices and profit-taking.

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