Stocks Mostly Lower into Final Hour on Global Growth Worries

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Alternative Energy longs, Computer longs and Commodity/Emerging market shorts. I covered some of my (IWM)/(QQQQ) hedges this morning, thus leaving the Portfolio 75% net long. The tone of the market is mildly bearish as the advance/decline line is slightly lower, sector performance is mixed and volume is above average. Investor anxiety is above average. Today’s overall market action is neutral. The VIX is falling .74% and remains above average at 22.97. The ISE Sentiment Index is very low at 84.0 and the total put/call is above average at .98. Finally, the NYSE Arms has been running about average most of the day and is currently .96. The 10-year yield is rising another 10 basis points today. Traders are currently anticipating a 25 basis point Fed rate hike in September. In my opinion, this is unlikely, notwithstanding recent hawkish Fed commentary. The Euro Financial Sector Credit Default Swap Index is rising another 4.1% today to 82.9 basis points. This is up from a low of 52.66 on May 5^th, but still down from 129.46 basis points on March 20^th. On the positive side, the US dollar index is jumping 1.2%, oil has reversed $7/bbl. lower from morning highs and the TED spread is falling 2.3% to .79 basis points today. I think it would take a move in oil back below $120/bbl. to really ignite a broad powerful US stock rally. One of my longs, (ISRG), remains under pressure despite Deutsche Bank saying today that hospitals were recently given the ability to get higher rates for robotic surgery. I plan to add to this long position on any further meaningful decline from current levels. Nikkei futures indicate an +60 open in Japan and DAX futures indicate an +19 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices and short-covering.