Stocks Falling into Final Hour on Parabolic Rise in Energy Prices

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Internet longs and Software longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short this morning, thus leaving the Portfolio 75% net long. The tone of the market is very bearish as the advance/decline line is substantially lower, most sectors are declining and volume is about average. Investor anxiety is above average. Today’s overall market action is very bearish. The VIX is rising 21.8% and remains above average at 22.7. The ISE Sentiment Index is below average at 126.0 and the total put/call is above average at 1.12. Finally, the NYSE Arms has been running high most of the day and is currently 1.58. The spike is oil is a major negative for the broad US stock market. However, it has gotten to the point that any rise in oil from current levels will likely result in a corresponding spike in global demand destruction, which should accelerate the bursting of the commodity bubble. Nigeria just said that “OPEC is ready to intervene to cool world oil prices.” Prices anywhere near current levels are doing massive irreparable long-term damage to the future of the Middle East’s major export, in my opinion. This is one of the main reasons that the Middle Eastern bourses remain in their bear markets that began two years ago, in my opinion. The Saudi Tadawul Index is down 52% from its high set in February 2006. Nikkei futures indicate a -389 open in Japan and DAX futures indicate a -11 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering.