Stocks Lower into Final Hour on Rising Credit Market Angst, Global Growth Concerns

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Software longs, Internet longs, Computer longs and Alternative Energy longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is 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 bearish. The VIX is rising 12.5% and remains above average at 20.04. The ISE Sentiment Index is low at 109.0 and the total put/call is above average at 1.10. Finally, the NYSE Arms has been running high most of the day and is currently 1.32. The (XLF) is down 1.4% today on the S&P downgrade news. I am somewhat surprised it isn’t down more. The European Financial Sector Credit Default Swap Index is rising 11.6% today to 70.72 basis points. As well, the North Amer. Inv. Grd. Credit Default Swap Index is rising 6.2% and the TED spread is gaining 7.1% today. While the financials aren’t as weak as I would have expected, the broad market is weaker than I would have expected given today’s news. This is likely due to increasing global growth concerns. One of my longs, (WMS), was rated Overweight with a target of $45 today by JPMorgan. I think the stock is at an attractive entry point for both long and short-term investors. Nikkei futures indicate a -240 open in Japan and DAX futures indicate a -8 open in Germany tomorrow. I expect US stocks to trade mixed into the close from current levels as less economic pessimism is offset by rising credit market angst.